Tesco reveals higher sales and profits for the past year

Meanwhile, overall revenues excluding VAT rose by 4.4 per cent to £68.2bn for the year.

Tesco said retail like-for-like sales grew by 6.8 per cent for the year, as it benefited from a return to volume growth in the UK and Ireland in the second half of the year as easing price inflation led shoppers to buy more products.

This offset a 17.2 per cent drop in fuel sales driven by falling petrol and diesel prices.

Tesco told shareholders it saw growth supported by investment to improve value, with the retailer cutting prices on around 4,000 products over the year.

The company was among grocers to invest heavily into price improvements amid strong competition from German discount brands Aldi and Lidl.

Chief executive Ken Murphy said: “Customers are choosing to shop more at Tesco, which is reflected in growing market share as they respond to the improvements we’ve made to the value and quality of our products.

“Inflationary pressures have lessened substantially; however, we are conscious that things are still difficult for many customers, so we have worked hard to reduce prices and have now been the cheapest full-line grocer for well over a year.”

Richard Hunter, Head of Markets at interactive investor, commented: “Tesco has again cemented its position as the pre-eminent grocer of the British aisles, driven by a relentless focus on both value and quality.

“Its appetite for lowering prices for customers is enabled by its sheer scale and strength, falling food inflation, and a significant cost reduction.

"In turn, this creates something of a virtuous circle, with more customers attracted by the likes of the group’s Aldi Price Match, Low Everyday Prices and Clubcard Prices.

Mr Hunter added: “At the same time, it has also honed its upper end offering, with its Finest range continuing to take market share from its rivals. Finest sales exceeded £2bn for the period, an increase of 15.7 per cent, with volumes up 9 per cent and the range now in front of 23 million customers.”

Meanwhile, the hub of the business continues to flex its muscles in a notoriously competitive environment, Mr Hunter said.

He added: “Retail like-for-like sales grew by 6.8 per cent, including an increase of 7.7 per cent in the UK, and the value and volume of market share increased once more to stand at 27.6 per cent (and 34 per cent for the online business), putting clear light between its size and that of its nearest competitors.”

Given its position, it can be difficult for the group to continue to exceed expectations, but Tesco is showing few signs of fatigue as its presence weighs heavily on competitors, according to Mr Hunter.

He added: “The share price has seen an increase of 9 per cent over the last year, as compared to a gain of 1.9 per cent for the wider FTSE100 and the new buyback programme should additionally be price supportive as it rolls out.”