The Week Ahead: The City's favourite shop looks set to deliver the goods again

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Tesco, it would seem, just can't put a foot wrong. On Friday, the supermarket giant will update the City on first-quarter trading and no one is expecting anything except more upbeat news.

Tesco, it would seem, just can't put a foot wrong. On Friday, the supermarket giant will update the City on first-quarter trading and no one is expecting anything except more upbeat news.

Under the stewardship of chief executive Sir Terry Leahy, the chain has become a giant of the supermarket sector, both in the UK and increasingly overseas. As Lehman Brothers said in a recent research note: "We continue to view Tesco as the best long-term growth story in the food retail sector, and expect first-quarter trading to support the delivery of compounded earnings growth."

Underlying sales in the UK are expected to come in slightly below the previous quarter, where a 7.5 per cent improvement was recorded . Analysts are looking at growth somewhere between 5 per cent and 6.5 per cent this time round. The last quarter of the financial year always has an advantage, however, as it includes the festive shopping season.

Instead, overseas trading will be the focus of most analyst attention. Overall, the City is looking for sales growth of around 20 per cent. But concern could begin to fester if, within that, key countries continue to report negative like-for-like figures. Specific countries include Poland, the Czech Republic, Slovakia and Korea.

Yet, with many of Tesco's core competitors struggling - J Sainsbury has warned on profits while the Wm Morrison-owned Safeway has been slashing prices in an attempt to reverse sliding sales - the chain remains just about every analyst's top pick.

Meanwhile, across the Channel, Dutch retailer Ahold - the world's third-largest food provider with a sizeable proportion of its business in the US - publishes first-quarter earnings. It has been a tough time for the group of late as it strives to restore investor confidence following revelations last year of profit being overstated.

This year did not get off to a good start, however, when Ahold warned in May that first-quarter sales had fallen 11 per cent as price reductions and the dollar's weakness against the euro hit home. The key issue now is margins in the US, and analysts will be scrutinising this area closely. JP Morgan is forecasting a "cautious" 4.6 per cent.

Stock watchers are also hoping management will give an update on disposals. Yet most are generally agreed that 2004 will continue to be, as JP Morgan sums up, "a volatile year with mixed newsflow and results".

Aside from this tale of two retailers, corporate results across Europe are at a minimum. Only a handful of established names are scheduled to report: software group Misys, restaurant and hotels group Whitbread and cruise group Carnival will provide updates on trading, while Majestic Wine, the off-licence chain, and British Energy publish full-year numbers. In Ireland, china and crystal group Waterford Wedgwood issues final results on Thursday.

Instead, the focus continues to be on the economic environment. And, following recent announcements from the Bank of England and the European Central Bank, the attention now falls on the US. The Federal Reserve is not due to make its decision on interest rates until later this month; chairman Alan Green- span sent markets into a frenzy of speculation last week after remarking that the rate-setting committee was "prepared to do what is required" should inflation pick up.

Therefore, this week's stream of data will be pored over as traders try to work out what the Fed will do. Retail sales are expected to rebound sharply in May, following a weak April, and the housing market is predicted to remain strong. Elsewhere, industrial production is likely to be robust and inflation - Mr Greenspan's bugbear - could well be on the up.

It means that the publication on Wednesday of the Fed's Beige Book anecdotal survey of current economic conditions will take centre stage in the week's stream of data. Mr Greenspan is also likely to be in the news again when he appears before the Senate Banking Committee the day before.

Back home, and the economic newsflow does not ease off. Updates will be provided on the retail sector, inflation and unemployment.

Elsewhere, and investors suffering from an economics overload can get some light relief at a handful of annual general meetings. Pirc, one of the most activist shareholder groups, is recommending its members oppose the remuneration report at Whitbread, the owner of Pizza Hut and Travel Inn, over concerns about disclosure and incentive targets that are "not considered sufficiently challenging".

Pirc is also calling on members to oppose Deloitte, the auditor of drugs giant Shire Pharmaceuticals, over the level of non-audit work.

But the biggest fish it intends to fry is everyone else's favourite: Tesco. The group is concerned about the level of bonuses and whether incentive schemes meet the standards of best corporate practice.

CALENDAR

Tomorrow 14

UK: Results: (final) Carclo, Creston, Helphire, Innovation Research & Technology, Majestic Wine, Printing.com, Radstone Technology, Renold, Workspace; (interim) Capcon Holdings.

Tuesday 15

UK: Results:

(F) AIT, British Energy, Goldshield, Latchways, PHS, Vedanta Resources, Vp; (I) Civica, Grainger Trust.

Wednesday 16

UK: Results: (F) Oasis Healthcare.

Thursday 17

UK: Results: (F) AEA Technology, Dart, McKay Securities, Workplace Systems; (I) Gooch & Housego.

Ireland: Results: (F) Waterford Wedgwood.

Friday 18

UK: Results: (F) Business Systems Group Holdings.

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