Sales at established United Kingdom and Irish stores rose 2.4% in the final quarter, slightly ahead of the 2.2% analysts had expected.
Tesco reported sales growth across its channels: online grocery sales were up by 5.1% during the year, with higher order numbers and average basket sizes, while its Express convenience stores saw sales growth of 2.7%, and large stores of 1.9%.
Tesco's operating profit was ahead of expectations too, rising more than 28 per cent to just over £1.6 billion.
Tesco made a profit of GBP79.0 million through exceptional property transactions, down from GBP165.0 million the year before, through the sale of its Hackney store as part of the chain's air-rights programme, the exit from a joint venture with FTSE 100-listed property development company British Land Co PLC and the disposal of one Central European store in the second half of the year.
Profits stood at £145mn for 2016-17 but soared to almost £1.3bn over its most recent 12-month period, remaining "on track" to achieve its medium-term ambitions.
Shares in Tesco were up 3.6% this morning at 7:15 GMT. We are generating significant levels of cash and net debt is down by nearly GBP6 billion over the last three years.
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Tesco's Lewis said that despite "difficult circumstances", which include a tough United Kingdom market and an inquiry by the Serious Fraud Office into accounting problems dating to 2014 the company was "slightly ahead of where we thought we might be at this stage".
Tesco notes in the United Kingdom and Republic of Ireland operating profit before exceptional items increased 31.1% to £1.1 billion, as "efforts to reduce operating costs and improve efficiencies across our store estate and head office have delivered a significant increase in profitability, particularly during the second half".
The CEO's first task was to stabilize Tesco, which he did, then start its growth again by focusing on having more competitive pricing, new more streamlined product ranges, improved customer service and much more improved relationships with supplier.
Tesco today also announced its first end of year dividend since 2014, with a final payout of two pence, giving a three pence full-year dividend for shareholders.
Tesco said it was firmly on track to deliver its medium-term targets.
Dave Lewis, Tesco's chief executive called the year another one of "strong progress".