Tesco surprised the City today when it unveiled Laurie Mcllwee as its new finance director, one its most important appointments for several years.

With the supermarkets chain heading into what it admits will be a “very tough year” and facing suggestions it is losing out to rivals Asda, Morrisons and J Sainsbury, analysts expected the well-regarded Eamonn O'Hare to get the nod.

He is finance director of the UK arm, and was seen as favourite to take on one of the most powerful jobs in retail.

Instead Mcllwee, a 46-year-old who joined Tesco in 2000, will be asked to help steer the company through a patch that is rocky by its own standards.

Tesco sales in the seven weeks to 10 January were up by 2.5%, a much smaller rise than others enjoyed as supermarkets emerged as one of the few winners from the recession.

Mcllwee, presently distribution director, replaces long-standing finance director Andrew Higginson, who is to become chief executive of retailing services. This arm includes Tesco Personal Finance, the venture the company has earmarked to drive future growth in the UK business.

Chief executive Sir Terry Leahy believes Tesco can cash in on the public's intense dislike of the traditional banking sector, and take business away from the likes of Lloyds Banking and Barclays.

Higginson is perhaps the favourite to succeed Sir Terry when he eventually decides to retire, but that could be several years away.

Mcllwee is also now in a position to push his claims. He earlier spent nine years at PepsiCo and has worked at Frito-Lay and Walkers Snack Foods.

The City was largely supportive of the promotion. Shore Capital said in a note to clients that the move is “good and reassuring”.

It added: “Naturally, it will take time for Mcllwee to become familiar with the nuances of investor relations, and we would encourage a reasonably extended period of learning and listening in that respect.”

Mcllwee, a chartered management accountant, is married with six children. Sir Terry said: “His appointment is a great example of the strong internal talent coming through the business at every level. Laurie has a strong track record.”

Tesco shares dipped 2.7p to 357.9p in a falling market.