Tesco focuses on overseas as Philip Clarke replaces Sir Terry Leahy

Tesco indicated today that it expects future growth to come from outside the UK, by naming international expert Philip Clarke as the man to replace Sir Terry Leahy at the helm of the

Leahy's surprise decision to step down after 14 years as chief executive left some in the City speculating that he feels Tesco will struggle to expand any further, at least in Britain, and that the move into America may fail.

"I feel that my work is largely complete," said Leahy, who will retire next March aged 55 while retaining shares, options and pensions worth an estimated £70 million.

Clarke, who at 50 is 10 years older than Leahy was when he took the top job, is seen as a steady pair of hands who lives for the company. He has been in charge of international operations since 2004, building Tesco into the first or second biggest player in many countries such as Malaysia.

Stockbrokers Killik & Co said: "Leahy's decision to stand down should not come as a complete shock, but the timing of the announcement is a surprise.

"The succession issue was increasingly likely to become a drag on the shares, and we believe this announcement clears the air to some extent. The replacement is currently responsible for Asia and Europe, both of which will be key drivers for the Tesco story going forward."

Sam Hart at Charles Stanley said: "It comes as something of a surprise. We had anticipated Leahy would stay at Tesco for a few more years until he had proven that Fresh & Easy in the US had been a success."

Clarke will become only the sixth Tesco chief executive in 80 years, an extraordinary record of stability that analysts say is now under threat. Due to retire at 57, he can only serve half as long as Leahy at best.

Chairman David Reid said the decision to step down was Sir Terry's alone, though the pair had been in talks about it for months. "It is a loss to the business," he said. "But we have been planning for succession for many years."

Investors seemed somewhat concerned by the development, sending Tesco shares down 10.7p to 396.4p. That removed £870 million from Tesco's market value. Caroline Gulliver at Execution Noble said: "Phil is a worthy successor in our view. He is a Tesco man through and through."

Clarke worked for Tesco while still at school, later joining the graduate training scheme after a degree in economics at Liverpool University.