Belt-tightening shoppers seeking value for money helped Morrisons to cash in on the tough economic climate last year.

It means new chief executive Dalton Phillips will inherit a business in good shape, giving him a head start over his main rivals, when he takes up the job on March 29.

Research showed that Morrisons’ market share grew to 12.6 per cent from 12.3 per cent a year earlier The Bradford-based supermarket group attracted its highest-ever number of customers to its 425 stores, with the average weekly number of shoppers rising by seven per cent.

Sales of its own label ‘Value’ range rose by 34 per cent as shoppers shunned organic and Fairtrade goods, whose sales dropped.

Britain’s fourth largest supermarket chain boosted profits by 21 per cent through record sales in the year to January 31, 2010.

The company reported pre-tax profits of £767 million against £636 million in the previous year as turnover rose six per cent to £15.4 billion.

In the recession, Morrisons saw like-for-like sales growth slow across the period to six per cent compared with 8.2 per cent the year before.

The growth strategy of previous boss Marc Bolland, who left to run Marks & Spencer, saw 43 new stores opened in 2009, including 30 former Somerfield sites bought from the Co-op. The company also recruited 10,000 more staff.

Morrisons hopes to open 60 mainly large stores of between 10,000 sq ft and 40,000 sq ft over the next three years, adding another 1.5 million sq ft of space to the one million added in the past thee years..

Most of the new developments will be in the South of England to reach the seven million households not within a 15-minute drive of a Morrisons store.

Christmas trading saw a sales surge as Morrisons outperformed the market for the fourth year in a row during the festive season, putting its larger rivals in the shade.

Chairman Sir Ian Gibson said the supermarket would continue with its long-term strategy of investing in growth, with new selling space and manufacturing capability in the year ahead.

Morrisons is the only major UK supermarket to run its own food processing plants.

Sir Ian said: “Morrisons had another good year. Once again, our focus on fresh food and great value appealed to shoppers everywhere, and we have successfully grown sales and profits to record levels.

“We expect the economic environment to remain challenging, disposable incomes to be under pressure and value to remain a high priority for consumers,” he said.

“The board believes that Morrisons’ unique offer of high quality, fresh food at great value prices will continue to attract customers from our competitors and drive market share growth in the year ahead.”

Shareholders will benefit form a 41 per cent increase in the annual dividend payment of 8.2p a share compared with 5.7p the previous year.