Australia's biggest supermarket chain by store numbers, Woolworths Ltd has reported a fall of 15 per cent in profits to A $ 1.82 billion.

The profits fell mainly due to costs linked to the exit from its Dick Smith electronics business. The retail chain also struggled to compete with rival Coles in the country. The company had to make A $ 420 million in provisions for the closure of Dick Smith stores and a proposed sale of business. Dick Smith had already cost Woolworths a $300 million provision for the first half.

This is the first time since 1999 that the company has reported a fall in net profits as it continued to spend on refurbishments and opening of new store. The company’s profit before the A $ 420 million provision rose 3.6 per cent, according to estimates. It recorded profit from continuing operations excluding Dick Smith of $2.182 billion.

The sales of the company rose 4.8 per cent to $55.5 billion even as the market expectations were below expectations. Chief executive Grant O'Brien informed investors that the company’s earnings are expected to grow between 3 and 6 per cent during the financial year.

The company is investing in new supermarket store format for 100 existing sites and the construction of more than 30 new stores in its biggest investment initiative in three years.