Tesco chairman quits with “profound regret” over profits error
Sir Richard Broadbent has announced he will leave the UK’s largest retailer following the announcement of a bigger-than-expected hole in its profits.
Reports emerged last month that Tesco had overstated its profits by an estimated £250 million. Even just a few days ago, rumours that this could be a ‘worst case scenario’ and that the figure actually stood at between £200 million and £250 million circulated.
However, Tesco this morning announced its profits for the first half of the year were overstated by £263 million, which has coincided with a sharp fall in sales and profits for the first half of its financial year.
Like for like sales excluding petrol fell 4.4 per cent for the first half, with pre-tax profit down to £112 million, a decrease of more than 90 per cent on the same period the previous year.
Deloitte, the accountancy firm investigating Tesco’s profit black hole, found the supermarket had overstated by £118 million in the first half of the year, by £70 million for the 2013-2014 financial year and by £75 million the year before that. The report has now been passed on to the Financial Conduct Authority.
Sir Richard said he was now preparing to leave the position he joined in 2011: “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,” Sir Richard added.