The grocery giant saw particularly good growth in clothing, electricals and toys as it took up some of the slack from Woolworths.
Net profits jumped by 9.3 per cent to £2.327bn in the group's financial year which ran until the end of February.
It compares with £2.133bn in the previous year and beat market expectations of £2.32 billion.
Revenues, meanwhile, grew 6.8 per cent to £62.537bn.
The group enjoyed its best Christmas for three years as it reported a 4.9 per cent rise in UK like-for-like sales.
But UK like-for-like sales growth for the overall year is likely to be down at around three per cent from 4.3 per cent as the firm faces easing food inflation, a tougher consumer climate and increased competition from Sainsbury's, Morrisons and Asda.