Variety store group Wilko has become the latest to feel the heat from the rise of rival value specialists and has posted a plunge in profits.

Privately owned Wilko reported earnings down to £5.5m in the financial year to January from £27.5m the previous year, according to The Times.

Sales slipped 1.2% to £1.4bn, accounts filed at Companies House showed.

Wilko described the year, in which it had hoped its first national TV advertising campaign would help performance, as “very disappointing”.

The retailer attributed its weak showing in part to price cuts by grocers and the impact of value specialists such as Aldi and Lidl.

“We have seen the effect of this in those categories where we compete with the grocers such as household cleaning,” Wilko said.

Finance director Ian Ellis said the advertising campaign did not bring the expected benefits.

He reported: “We entered the year with an air of optimism as we planned to screen our first TV campaign over Easter 2014.

“Disappointingly, this did not deliver the anticipated increase in number of customers visiting our shops during the year and overall we continued to lose market share.”

The retailer also pointed to the costs of online fulfilment, which were still “far too high”, as among the issues it faced.

Since Christmas, Wilko said separately, trading had been better.

The retailer, which has 370 branches, will open 14 more shops in the current year and revamp 75.