They say the bigger they are, the harder they fall – this rings true for Britain’s biggest supermarket Tesco today.
Tesco chairman Sir Richard Broadbent is set to quit after the retailer confirmed that profits in the first half of the year were overstated by £263m. The profit overstatement was previously estimated to be £250m.
The retailer also reported a dip in sales and profits. Statutory profit before tax, which includes one-off items, dropped to £112m – down more than 90% on the same period last year.
Like for like sales, excluding petrol, dipped 4.4% in the first half of the year.
Tesco shares fell more than 6% in early trading in London.
Tesco chairman Richard Broadbent said: “The issues that have come to light over recent weeks are a matter of profound regret. We have acted quickly to clarify the financial performance of the company. A new management team is in place to address the root causes of the mis-statement and to develop and implement the actions that will build the company’s future. I am confident that the new chief executive and chief financial officer will move rapidly and effectively in this respect.
“I will begin now to prepare the ground to ensure an orderly process for my own succession at that time. My decision reflects the important principle of accountability on behalf of the Board and will support the company to draw a line under the past as it enters the next phase of its development.”
Tesco chief executive Dave Lewis said: “Our business is operating in challenging times. Trading conditions are tough and our underlying profitability is under pressure. We do however face these challenges from a position of market strength and I have been heartened by the team’s welcome and their determination to stay focused on doing the very best for our customers.”
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