WORSE-than-expected retail sales dragged down Woolworths' full-year profits by more than 60 per cent, the company has announced.

The high street retailer posted underlying pre-tax profits of just £21.8 million for the 53 weeks to February 3, compared with £57.7 million the previous year.

Woolworths was hit by falling CD and DVD prices through increased competition from supermarkets and online sellers as like-for-like retail sales fell 6.6 per cent.

The slump in sales led to a £12.9 million loss from its continuing retail high street operations, against a £17.1 million profit previously.

But there was a brighter performance from the company's wholesaling and publishing business, which posted adjusted profits of £53.7 million.

Woolworths chief executive Trevor Bish-Jones said: "The environment ahead is going to be fairly challenging and we are going to look to control costs like we did last year."