Tesco criticised over record sales

The company, which has 1,500 stores in the UK, grew underlying profits by more than 13% for the year to February 24, despite increasing competition from resurgent rivals Asda and Sainsbury's.

But Tesco's massive profits haul also sparked criticism from groups representing small businesses and environmentalists concerned over the chain's prominence and the apparent creation of "Tesco towns".

John Wright, national chairman of the Federation of Small Businesses, said: "Small retailers could compete with the supermarkets if there was a level playing field."

The Competition Commission is investigating the £95 billion grocery sector after the Office of Fair Trading found evidence to suggest some supermarket chains were using large "land banks" to stop rival retailers opening new outlets. Tesco has a grocery market share of more than 30% and opened more than two million square feet of sales space in the UK last year.

Friends of the Earth campaigner Vicki Hird also accused the chain of "driving High Street stores out of existence". She said: "The time has come to put the brakes on the Tesco juggernaut and curb its power."

Tesco chief executive Sir Terry Leahy, who has led the Cheshunt based company for 10 years, responded: "Tesco is a big company, we touch on a lot of people's lives so people are going to have a range of views. We listen to the views of the millions of customers for whom Tesco is an important part of their weekly lives. There is a stronger voice out there for Tesco."

Tesco posted sales of £35.6 billion in the UK - up 5.6% on last year on a like-for-like basis driven by demand for healthier foods and organic products. Online service Tesco.com, which now has 850,000 regular customers and more than 250,000 orders a week, saw sales increase 29.2% to £1.23 billion.

Overall, UK trading profits were £1.91 billion - 9.2% ahead of the previous year. The performance came despite £42 million in start-up costs for the company's Tesco Direct catalogue service and establishing its operations in the US, which is set to open its first stores later this year.

The company's share price also rose more than 1% on the results and the company's plans to double its returns to investors by selling off parts of its £17 billion property portfolio. Tesco said it plans to return £3 billion to shareholders over the next five years.