Shoppers' boom is over for Tesco

TESCO has reported a sharp slowdown in British sales growth as the extraordinary shopping splurges of last year began to peter out. Chief executive Sir Terry Leahy said British like-for-like sales, stripping out new store space, were up 4.5% in the 12 weeks to 18 May, compared with the 6.2% in the year to 31 December.

The figures were broadly in line with analysts' expectations as Leahy had previously cautioned that the boom times enjoyed by supermarkets in 2001 were unsustainable. The company today forecast like-for-like sales growth would settle at between 3% and 4% this year.

Leahy faces tough questioning about his controversial two-year rolling contract at today's annual general meeting. The National Association of Pension Funds has called on institutional shareholders to abstain from voting for his re-election to the board under the proposed terms, as corporate governance guidelines recommend one-year contracts as best practice.

First-quarter sales across the group, including those from new stores, rose 11%. Overseas sales were up 32%. Seymour Pierce analyst Richard Ratner said: 'We'd all expected a slowdown - this is still a pretty creditable performance.'