Buoyant Tesco 'firing on all cylinders'

UK supermarket giant Tesco unveiled further strong sales growth today as it prepared to face shareholders over controversial board contracts.

The retailer, which was holding its annual general meeting in London, is under fire for having directors on two-year rolling contracts, which lobby groups say lead to excessive pay-offs and encourage “reward for failure”.

Despite the disquiet over remuneration, the company was set to give investors an upbeat assessment of trading today.

In the 12 weeks to May 17, Tesco said total UK sales rose 12.3% with the key like-for-like figure ahead 5.8% on a year earlier.

A Tesco spokeswoman said: “We are firing on all cylinders and in all aspects of our performance. Customers seem to like what we are doing.”

Group sales in the first quarter increased 15.1% year-on-year with the core UK performance complemented by increasing non-food sales, a strong performance overseas and the success of other retailing services.

International sales were up 28.4% in the first quarter with all 10 countries where Tesco has outlets contributing to the growth.

At today’s meeting, the National Association of Pension Funds (NAPF) has urged members to abstain from voting on the re-election of three executives, including deputy chairman David Reid.

The NAPF wants contracts of one year or less in order to avoid directors of UK companies leaving with excessive pay-offs.

Pension Investment Research Consultants (PIRC), which urged shareholders to vote against pay deals at GlaxoSmithKline last month, is also concerned about the contracts given to Tesco directors.

Tesco said it was now committed to putting new board appointments on one-year contracts but said it was obliged to honour those two-year deals which had been negotiated previously.