Tesco boss to quit over profits error

Oct 23, 2014, 3:09 AM EDT
A Tesco logo sits on a sign outside a Tesco Extra supermarket store, operated by Tesco Plc, in the Old Kent Road district of London, U.K., on Thursday, Sept. 25, 2014.
AFP/Getty Images

Tesco chairman Sir Richard Broadbent will leave the firm after the company announced a bigger-than-forecast hole in its profits. The BBC reports:

Tesco now says that profits in the first half of the year were overstated by £263m. That is an increase from last month's initial estimate of £250m. Tesco also reported a sharp fall in sales and profits for the first half of its financial year.

Excluding petrol, like-for-like sales, which strip out new stores, fell 4.4% in the first half of the year and pre-tax profit slumped to £112m, down more than 90% on the same period in the previous year. Accountancy firm Deloitte has completed an investigation into Tesco's misreported profits.

It found that profits were overstated by £118m in the first half of this year, by £70m in the 2013-2014 financial year and by £75m before that.

Deloitte's report is being passed to the Financial Conduct Authority and other regulators. Sir Richard said he was preparing to step down, although no date has been set for his departure.

"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," Sir Richard said in a statement.

"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," he said.