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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. |
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. | 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. |
'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." |