Tesco profits drop 92%

Tesco chairman Sir Richard Broadbent is to step down after the supermarket revealed the “black hole” in its accounts was even bigger than had been suspected and saw pre-tax profits plummet 92%.

The company’s interim results announcement, for the first half of the 2014-2015 financial year, contained the results of Deloitte’s investigation into the accounting scandal – which found a £263 million shortfall from the company’s profits, higher than the supermarket’s estimate of £250 million.

The scandal has seen Tesco’s global head of BWS Dan Jago suspended, one of eight top-level staff suspended over the affair.

Broadbent said: “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. 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. I am confident that the new chief executive and chief financial officer will move rapidly and effectively in this respect.

“Once this transition is complete and business plans are in place, it will mark the beginning of a new phase for the company and I will begin now to prepare the ground to ensure an orderly process for my own succession at that time. My decision reflects the important principle of accountability on behalf of the board and will support the company to draw a line under the past as it enters the next phase of its development.”

Chief executive Dave Lewis said: “Our business is operating in challenging times. Trading conditions are tough and our underlying profitability is under pressure. We do however face these challenges from a position of market strength and I have been heartened by the team’s welcome and their determination to stay focused on doing the very best for our customers.  

“While my review of the whole business continues, three immediate priorities are clear: to recover our competitiveness in the UK, to protect and strengthen our balance sheet and to begin the long journey back to building trust and transparency into our business and brand.”

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