The British supermarket giant Tesco pledged Wednesday to invest £1.0 billion in a bid to transform the fortunes of ailing domestic operations as it posted higher annual profits on rising global sales.

Earnings after taxes rose six percent to £2.80 billion ($4.47 billion, 3.40 billion euros) in the year to February 25, compared with £2.66 billion last time around, Tesco said in a results statement.

The figure was slightly higher than market expectations.

The world's third-largest retailer after US-based Wal-Mart and France's Carrefour also revealed that sales jumped 7.4 percent to £72 billion, boosted by its international division.

However, Tesco acknowledged that its annual trading profit in Britain had declined by 1.0 percent to about £2.5 billion amid fierce competition from rival supermarket chains like Sainsbury's and Wal-Mart unit Asda.

The London-listed grocer added that it will spend £1 billion over the coming year on its plans to improve the shopping experience for British customers, including through the revamp of stores, recruitment of more staff and better prices and value.

"The last few months have seen us drive a faster pace of change in Tesco, particularly in the UK, reflecting our determined focus on the immediate objectives for the group. This pace of change will accelerate further over the next twelve months," chief executive Philip Clarke said in the statement.

"We have already taken important steps to renew and strengthen management in the UK and across the group in key areas, to support this programme of change," added Clarke, who assumed responsibility for British operations in March.

"Whilst our international business is delivering excellent growth, contributing £1.1 billion of profit to the group, we fully recognise that we need to raise our game in the UK."

"As a result, we are committing over £1 billion to make the UK shopping trip better for customers: more staff giving improved service in-store; refreshed stores that are better and easier places to shop; lower prices and even more value from an improved product range."

The £1-billion investment is part of plans Tesco announced in March to create 20,000 jobs by 2013.

Wednesday's annual results were published a month after Tesco's head of British operations, Richard Brasher, quit following poor Christmas results and a profit warning in January.

The supermarket giant meanwhile admitted that the global economic outlook was "mixed", as it faced headwinds from the weak world economy, high oil prices and rising taxation.

In reaction to the results, Tesco's share price gained just 0.21 percent to 329 pence on London's FTSE 100 index of leading companies, which was down 0.15 percent at 5,757.95 points.

"Tesco's news about declining UK profit ... has not come as a surprise," said Himanshu Pal, analyst at Kantar Retail.

"There has been a clear lack of investment in stores and staff for the last couple of years, and the retailer now trails several competitors in terms of fresh food offer, customer service, and in-store standards.

"It is a daunting challenge to turn around Tesco's fortunes in the UK, but the plans announced today are likely to help the market leader get back on track.

"It is also worth remembering that, although Tesco has encountered problems in its home market, its global growth has surpassed many of its international competitors."