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UK MD Chris Bush is among four executives said to have been suspended by Tesco regarded an overstatement of half-year profits.
The BBC reports that an employee reported ‘an issue’ to the board and the UK’s financial regulator the Financial Conduct Authority on Friday which had previously led to Tesco predicting trading profits of 1.1bn for the six months ending August 23rd – an overstatement of 250m.
Tesco says that the profits overstatement was "principally due to the accelerated recognition of commercial income and delayed accrual of costs" and the timing of the accounting of payments between suppliers and Tesco”.
Chief executive Dave Lewis, who only assumed the role at the beginning of the month, conceded that "an element of" expected revenue from its suppliers had been "reported in the wrong time period", adding that the issue revolved around revenue received versus when the activity took place."
Lewis did say that the saga was "a serious issue" and that "disappointment would be an understatement" but insisted that "it doesn’t take away from what I’m able to build at Tesco" and that any action taken against employees was not "disciplinary or an admission of guilt".
Bush’s suspension was not confirmed although Lewis did say that Tesco’s multi-channel director Robin Terrell is currently in charge of UK operations.
As a result of the problems, Tesco has delayed its interim results statement from October 1st to October 23rd. Shares in Tesco have today fallen by 12 per cent.
