Around 117,000 Sainsbury's staff will share a £47 million bonus this year, after the supermarket group met a string of three-year targets designed to pull the store back from the brink.

However, the cost of fighting a year-long takeover battle and settling a dispute over milk pricing with the Office of Fair Trading took the shine of results as it led to flat pre-tax profits, despite an almost 6 per cent increase in sales in the year.

The supermarket group said today that its total sales for the year to 22 March had risen by 5.8 per cent to £19.3 billion but pre-tax profits were flat at £479 million, compared with £477 million the previous year.

Underlying pre-tax profits, not including the costs involved in the approach by the Qatar Investment Authority and other one-off costs, rose by 29 per cent to £488 million. Like-for-like sales rose by 3.9 per cent, despite what the supermarket group called a challenging trading environment where consumer budgets were under pressure.

The retailer said it had exceeded a series of targets set down under the “Making Sainsbury’s Great Again” scheme, which was launched in 2005 by Justin King, the chief executive. One of the targets was to add £2.5 billion of additional sales in three years - Sainsbury's said it had added £2.7 billion.

Profits have more than doubled in the three years of the turnaround plan, jumping from £238 million to £488 million. Customer numbers have risen from 14 million a week in 2005, to 16.5 million now.

Hitting the targets means that around 1,000 senior executives, including Mr King, will receive generous incentive payments under a share plan devised to complement the turnaround programme. Mr King is in line for a £6 million payout this summer.

Sainsbury's entire 117,000 staff will receive an average payout of £401 each as part of the success.

Philip Hampton, chairman, said: "This year has been particularly significant for Sainsbury’s since it marked the completion of the Making Sainsbury’s Great Again recovery plan announced in October 2004 and we moved from a period of recovery to growth."

The UK's third-largest supermarket, behind Tesco and Asda, said today that it expected supermarket trading to remain intensely competitive but added that Sainsbury's was now in a much better position to compete in a challenging environment where custoers were facing increasing constraints on household spending.

Sainsbury's plans to launch a non-food online business in September, with an initial investment of £15 million.

Shares in J Sainsbury fell in early trading by 3.25p to 386.5p. The shares price closed at 389.75p last night, valuing the business at £6.94 billion. Last year, the Qatar Investment Authority made a 600p a share indicative approach for Sainsbury but talks collapsed in November.

The QIA still holds a 25 per cent stake and is now free to make a fresh approach. The Sainsbury family hold an 18 per cent stake in the business.

Sainsbury's opened 14 new supermarkets during the year, extended 15 and refurbished a further 52. The retailer plans to add 10 per cent more space by 2010 and has begun actively searching for new sites again, with plans to open 30 new supermarkets and 100 convenience stores.

New space will be split across food and non-food ranges. In March, Sainsbury's stepped up plans to grow its non-food ranges with a new push into cut-price homewares. Sainsbury's is now the UK's 11th biggest clothing retailer, with sales of £300 million through its TU clothing range.

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