Tesco investigate financial misreporting
Tesco has started an internal investigation after it found that expected first-half profits were overstated by about £250m.
The company has also suspended the head of its UK business while its usual auditors PwC declined to comment.
The group has called in Deloittes and law firm Freshfields to investigate the incident and notified the Financial Conduct Authority.
Tesco's shares fell 8% on the news to an 11-year low of 212p wiping £1.5bn off the retailer’s market value.
On 29 August, Tesco told investors to expect profits of about £1.1bn for the six months to 23 August, down from £1.6bn a year earlier. However, the discovery of the overstatement of revenue paid to Tesco by its suppliers means the supermarket’s first-half profit will now almost halve to about £850m.
According to the Guardian, chief executive Dave Lewis said four top managers had stepped aside from their jobs while the investigation took place. Chris Bush, the company’s UK managing director, is understood to have been replaced by Robin Terrell, Tesco’s multichannel director.
The overstatement was discovered when a whistleblower alerted Tesco’s general counsel on Friday afternoon.
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