The company said underlying sales at its core Boots The Chemist chain, which is responsible for 85% of group profits, grew 7.5% in the October to December quarter.

Sales of cosmetics and perfume put in a strong performance, and the temporary reintroduction of electrical beauty products also proved popular.

"We have built on the successful performance in the second quarter, and established a higher platform for future sales growth," said chief executive Steve Russell.

"We intend to continue investment in price and increased promotions, albeit at some cost to our short term gross margin."

On a like-for-like basis - which strips out the effects of store openings and closures - sales of beauty products and toiletries were up 10.3%, while health items rose 4.1%.

Nottingham-based Boots said the lower growth in health sales was down to a fewer incidences of cold and flu this winter.

Competition

The retailers' upbeat numbers come a week after the Office of Fair Trading told the government it should stop restricting entry to the market.

If adopted by the government, these proposals could open the £8.6bn a year market for over-the-counter and prescription drugs market to newcomers such as big supermarket chains.

Until now, the number of pharmacies in the UK has been kept steady at 12,250, effectively protecting the market share of the biggest pharmacy operator, Boots.

The government will make a decision on the OFT's recommendations in the spring.

But it is keen on letting pharmacists play a greater role in providing healthcare advice, in order to relieve pressure on the state health service.