High Street store chain Woolworths has reported a full-year loss of �46m, hit by overstocking and poor Christmas sales.

The company, which floated off from former parent Kingfisher in August, made a profit of �54.3m the previous year.

Despite the loss, Woolworths chief Gerald Corbett said the company had got itself into a position to make a recovery in 2002.

The former Railtrack boss said the company had now stabilised, with debts brought down and sales up 6.2% in the weeks since its financial year ended on 2 February.

Low demand

The company was forced to sell off �110m of excess stock at reduced prices.

Woolworths suffered during the critical Christmas shopping period, carrying too much old stock that few people wanted to buy and not enough of the items that were in heavy demand, such as DVDs and games consoles.

Mr Corbett said higher sales were now expected, based on more exclusive product ranges and better product availability.

The 788-store chain is also considering "refreshing" the Woolworths brand to attract more customers, he said.

Confident of recovery

Turnover was �2.1bn, up 3.7%, but like-for-like sales fell 0.3%.

Mr Corbett said: "The board is confident of another year of good cash generation and recovery in profitability from which we can move to phase three of our plan - the return to growth."

Woolworths shares closed up almost 21% at 46.25p.