SIR Terry Leahy is to step down as boss of Tesco next year – but the retail giant will continue to be managed by a Liverpudlian.

Philip Clarke, who started with the company at its Allerton Road store in 1974, will step up from his current role as international and IT director next March.

Sir Terry, who grew up in Belle Vale and went to school at our Lady of Assumption and St Edward’s College, joined Tesco in 1979 and has been its chief executive for 14 years through a period of remarkable growth for the company.

Tesco chairman David Reid paid tribute to Sir Terry’s work, which has seen the retailer grow to become the world's fourth-biggest retailer by sales.

He said: “Terry has made an unrivalled contribution over a prolonged period. He is undoubtedly one of the leading businessmen of his generation. He has put in place a strategy which can secure the progress of Tesco for years to come.”

Last week, Tesco announced its annual profits had soared to £3.4bn on sales of £62.54bn. Nearly £20bn came from its overseas stores.

Sir Terry said: “When I became chief executive I had a plan to build Tesco around its customers, to make it number one in the UK and to find new long term growth in non-food, in services and in international expansion.

“I wanted to develop a purpose and values that could sustain Tesco through its challenges and encourage and grow future leaders.

“It has taken 14 years but that strategy has become a firm reality now and so I feel my work is almost complete.”

He said that Mr Clarke has “all the necessary talent, energy and experience to take the group forward”.

Mr Clarke, a former Blue Coat pupil who gained an economics degree from the University of Liverpool, has been on Tesco’s board since 1998.

He had been regional manager for Scotland and the North of England before taking responsibility for UK distribution, supply chain and IT.