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High street chain Woolworths saw its pre-tax profits drop from £61.5 million to just £16 million in its final-year results, it has revealed.

Releasing its results for the 12 months ending February 3rd, the stationery, magazine and entertainment retailer attributed the slip in part to difficult conditions on the high street.

Woolworths had suffered disappointing sales in the Christmas period, blaming "market weakness" for a 4.6 per cent like-for-like slip in its festive season trading profits.

Now the group's chief executive, Trevor Bish-Jones, has said that the "challenging retail environment" which dominated 2006 is expected to continue into this year.

He suggested a series of investments partly responsible for the 2006/07 profit slip would help Woolworths weather the storm, however.

"Last year was difficult for the Woolworths group, particularly for the retail business. But we made some important investments which we believe will deliver benefits for the business in the future," he said.

Woolworths reported that sales in the first seven weeks of its new financial year had risen by 0.8 per cent on a like-for-like basis, but Mr Bish-Jones emphasised that "it is still early days and we will continue to manage the business tightly".

Shares in the Woolworths group slipped by 1.54 per cent on early morning trading.