Britain’s biggest retailer Tesco has revealed that it underestimated the extent of its recent profit overstatement.
The company last month suspended four executives – including UK MD Chris Bush – after it admitted that profits had been overstated by 250m. That has now been upped to 263m, leading to the resignation of chairman Richard Broadbent.
In total eight executives have now been suspended.
An investigation by Deloitte has concluded that profits for the six months ending August 23rd were overstated by 118m with a 70m overstatement for the 2014-14 financial year and 75m for 2012-2013.
The errors were a result of booking returns on promotional deals ahead of time and delaying the costing.
Like-for-like sales for the last six months fell 4.6 per cent in the UK with profit slumping 90 per cent year-on-year to 112m. Underlying profit fell 47 per cent to 783m.
"The issues that have come to light over recent weeks are a matter of profound regret,” Broadbent said. We have acted quickly to clarify the financial performance of the company. 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."
Tesco shares are down nearly five per cent today.