Stormy waters for Tesco
Stormy waters for Tesco
During its final preparations for the forthcoming interim results, Tesco identified an overstatement of its expected profit for the half year, principally, the company said, was due to the accelerated recognition of commercial income and delayed accrual of costs.
On the basis of preliminary investigations in to the UK food business, the Board stated that the guidance issued on 29th August 2014 for the Group profits for the six months to 23rd August 2014 was overstated by an estimated £250m. Some of this impact included, what the Group calls, ‘in-year timing differences.’ Work is ongoing to establish the extent of the issues and what impact they will have on the full year. Four executives have been suspended, including UK managing director, Chris Bush.
The Board has asked Deloitte to undertake an independent and comprehensive review of the issues, working closely with Freshfields, the Group’s external legal advisers.
Tesco says it will provide a further update at its interim results, which will now be announced on the 23rd October 2014.
Dave Lewis, Group CEO said: “We have uncovered a serious issue and have responded accordingly. The Chairman and I have acted quickly to establish a comprehensive independent investigation. The Board, my colleagues, our customers and I expect Tesco to operate with integrity and transparency and we will take decisive action as the results of the investigation become clear.”
By close of play on Monday the value of the business was down by £2 billion as its shares plummeted.
