Tesco may have reported a fall in full-year profits this week, but chief executive Philip Clarke should be commended for taking the bold steps needed to set the grocer on the path to growth.

Tesco may have reported a fall in full-year profits this week, but chief executive Philip Clarke should be commended for taking the bold steps needed to set the grocer on the path to growth.

Clarke confirmed the exit of Tesco from the US, leading to a write-down of £1.2bn. He also revealed a property write-down in the UK of £804m and a goodwill impairment provision of £495m for Poland, the Czech Republic and Turkey, where tough economic conditions hit the business.

The write-downs mean Tesco’s statutory profit before tax has been halved, down 51.5% to £2.1bn. But Clarke has not taken these decisions lightly, and they will surely put Tesco on a firmer footing.

The US exit is not yet finalised, but the Fresh & Easy business is as good as dead to Clarke. He has chosen to invest in areas where he can deliver greater returns, and rightly so.

Clarke has also identified 100 sites that the grocer no longer wants to develop, well and truly signalling the end to the space race in the UK.

They were bought between five and 10 years ago, before anyone knew how much of an impact online shopping would have.

The strategy wasn’t wrong then - the space race was a key part of Tesco’s success in the 1990s - but Clarke is right to change direction now, as the retailer bids to become a leading global dotcom player.

While the write-downs have come at a cost, group trading profit was £3.5bn, down 13%, reflecting investment in the UK, and difficult trading conditions affecting South Korea and Central Europe. Online group sales were up 13% to over £3bn for the first time, a good sign for Clarke’s strategy.

Clarke is also confident the UK revival is “on track”. While he said the impact of the horse meat crisis has been short-term for the grocer, like-for-likes for the year were down 0.4%.

But importantly, he said customer perception of Tesco has improved and, while general merchandise is still suffering, food performance has been strong.

This year Clarke will undoubtedly try to improve that customer perception further, not least with the plan to bring warmth back to stores with investments such as Harris + Hoole and Giraffe.

There is much to play for both in the UK and overseas, and Clarke now has a solid foundation on which to build.