SUPERMARKET chain Tesco will see profits break the £2bn barrier this year, after buoyant Christmas sales.

The UK's largest retailer unveiled record figures for the seven weeks to January 8, with domestic sales up by 12.1 per cent.

The update was in sharp contrast to rivals Morrisons and Sainsbury's, who reported flat Christmas sales, while Tesco's expansion into non-food markets also hit Marks and Spencer and Woolworths.

Anthony Platts, assistant director at Tees Valley stockbrokers, Wise Speke said: "As retailers floundered over the festive season, Tesco kept their foot on the gas, expanding the rate of growth both in the UK and overseas, unmatched by any other."

Significant growth in petrol volumes pushed UK like-for-like sales up by 9.3 per cent on the previous year.

About £1 in every £8 spent by UK shoppers goes into the tills of one of the 780 Tesco stores and it has an estimated 29 per cent share of the food retail market. Over the festive period, it sold 4 million Christmas puddings, 250,000 PlayStation 2 games and 450,000 pairs of novelty socks.

It had 174,000 checkouts open for business during the run-up to Christmas, while 4,000 head office staff worked in stores to fill shelves.

Overall sales were up 13 per cent with international business up 16 per cent in countries including Hungary, Poland, Taiwan and Japan.

Finance director Andrew Higginson said: "It was a good Christmas for us.

"The credit goes to our 240,000 staff who worked their socks off to make sure customers got a good service."

Tesco is planning further international expansion and has announced it is to trial a new UK store format, selling only non-grocery items.

The retailer's growth into areas such as electrical products, CDs and clothes has been blamed for putting pressure on high street chains such as WH Smith.

Mr Platts said: "Its continued dominance of the supermarket sector is phenomenal.

"A scary fact for other retailers is that Tesco's non-food sales grew at twice the rate of food sales. The group is wading in to other's traditional markets, selling jeans for £5 and DVD players for £30."

Despite the rapid growth, its share price dipped slightly yesterday, as analysts had been hoping for an even better performance.