However, chief executive Stuart Rose continued to play down the retailer's extraordinary turnaround, stressing there was still 'much to do' to ensure long-term growth.
Sales increased 4.1 per cent to£7.8 billion, with a UK sales rise of 3.4 per cent. Like-for-like sales were up 1.3 per cent. Much of the improved performance came from food sales, which rose 7 per cent and 3.6 per cent like-for-like.
Clothing sales were flat, but recovered sharply in the second half of the year after a poor first half.
Rose said: 'We need to drive sales, grow market share, improve the performance from our existing stores and continue to buy better. We are under no illusions about the work necessary.'
He admitted that clothing had experienced a 'difficult' first half, but said: 'We improved market share and ended ahead on volume, but behind on value, primarily reflecting price deflation.'
The retailer is now focusing on full-price sales and at the end of the fourth quarter it recorded an improvement in full-price market share in all business areas for the first time in three years.
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