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Tesco boss Sir Richard Broadbent to quit over profits error Tesco boss Sir Richard Broadbent to quit over profits error
(35 minutes later)
Tesco chairman Sir Richard Broadbent has announced that he will be leaving the firm, following the firm's announcement of a bigger-than-forecast hole in its profits.Tesco chairman Sir Richard Broadbent has announced that he will be leaving the firm, following the firm's announcement of a bigger-than-forecast hole in its profits.
Tesco now says that profits in the first half of the year were overstated by £263m.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.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.Tesco also reported a sharp fall in sales and profits for the first half of its financial year.
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. 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.
The accountancy firm Deloitte has completed an investigation into Tesco's misreported profits. 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.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.Deloitte's report is being passed to the Financial Conduct Authority and other regulators.
Sir Richard said he was preparing to step down. 'Profound regret'
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."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."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.
Tesco timeline
17 April 2013: Tesco announces first fall in annual profits in almost 20 years, as it pulls out of the US.
16 April 2014: Tesco sees profits drop 6% as earnings fall for second year
21 July: Chief executive Philip Clarke says he will step down after failing to turn around the company's fortunes. His replacement will be Dave Lewis of Unilever.
29 August: Shock profit warning and interim dividend cut. Dave Lewis' start as chief executive is brought forward by one month.
1 September: Dave Lewis starts as chief executive
22 September: Profit hole of £250m discovered. Four senior managers asked to step aside while investigation is carried out.
7 October: Fifth executive asked to step aside
14 October: Three more executives suspended, taking the total to eight.
23 October: Profit hole revealed to be £263m, chairman Sir Richard Broadbent announces departure.
'Cause for alarm'
Analysts expressed concern over the accelerating fall in sales at Tesco.
Neil Saunders, managing director of Conlumino, said: "The ongoing scale of the decline - which accelerated in the second quarter of the trading period - does give cause for alarm. It also underlines how much the business needs to do in order to get back into growth."
Independent retail analyst Nick Bubb said: "It is interesting that Tesco feel unable to give any guidance on full-year profits, given all the uncertainties, and that there is hardly anything about the new strategy for the UK, apart from meaningless words about 'competiveness' and 'reviewing all strategic options'.
"The big issue is why UK sales are falling so much and it will be most interesting to hear what the embattled new CEO Dave Lewis has to say today."