Woolworths, the variety store retailer, has announced plans to invest £25m in its mainchain and downsize its loss-making 'big W' operation.

For the year to January 31, Woolworths posted pre-tax profit before exceptional items of £69.8m up from £52.8m last year. Group sales rose 3.1% to £2.8bn.

Following a review of big W, the company will not use the format for future stores and will downsize the 21 existing outlets, to be branded Woolworths. The range will focus on baby shop, kids rooms and party shop, with less profitable ranges such as adult clothing, toiletries and petcare, not ranged.

Like-for-like sales at the group’s MVC music and video store chain slumped 7.2%. The company blamed the drop on a “significant shift in focus to DVDs and games”. Woolworths said that “although the specialist sector will continue to be pressurised, we are more confident about the outlook for MVC in 2004/5”.

MVC will also relaunch its membership card as the ‘More’ card.

Meanwhile, at Entertainment UK, the group's music and video distributor, negotiations with Tesco on a new contract “continue”.

Chief executive Trevor Bish-Jones, said: “Our customers are responding well to improvements in our store standards, and in our products and the continued focus on being famous for 'Kids and Celebrations'.”