Tesco crisis: chairman Richard Broadbent resigns
23 October
Tesco chairman Sir Richard Broadbent has announced that he will step down, as the supermarket confirmed its profits had been overstated by £263m.
Sir Richard said that the accounting issue was "a matter of profound regret" and that his resignation reflects the "important principle of accountability on behalf of the board".
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
Tesco said the overstatement was the result of the way it had accounted for income from suppliers. Just £118m relates to trading profit in the first half of this financial year, with the rest relating to previous financial years. Chief executive Dave Lewis has not commented on whether it was due to an error or deliberate action, but said there was "evidence that no-one made any financial gain from the situation".
The company has suspended eight senior executives over the issue and the Financial Conduct Authority is investigating.
The Financial Times suggests Richard Cousins, the chief executive of Compass who joined the Tesco board earlier this month, could be one of the possible candidates to succeed Sir Richard.
Nick Bubb, an independent retail analyst, told the FT that the retailer offered hardly any information about a new strategy for the UK in its delayed interim results released today.
"Apart from the well-publicised profit margin accounting problem and associated management problems, the big issue is why UK sales are falling so much," he said.
Neil Saunders, managing director of retail consultancy Conlumino, said Sir Richard's departure would help Tesco move on from the accounting issues, but he warned that the company needed to spell out and enact a new strategy sooner rather than later.
"At present the perception is of a company drifting in a sea of various crises and it is important for someone to place a firm hand on the tiller and guide Tesco back to the calmer waters of growth," he said.
Tesco suspends top executives over profit overstatements
22 September
Tesco has suspended four senior executives and launched an investigation after it was revealed that that the company's profit forecasts had been overstated by a "jaw-dropping" £250m.
This morning, Britain's largest retailer announced that it had discovered a significant error in its accounts, caused by an overstatement of income and an understatement of costs.
"We have uncovered a serious issue and responded accordingly," Tesco chief executive Dave Lewis told The Guardian.
Markets reacted swiftly to the announcement as Tesco shares fell by 12 per cent in early morning trading.
The supermarket's UK managing director Chris Bush is believed to be among those suspended. An independent investigation, headed by Deloitte, is now underway to determine whether any rules were broken. Lewis, who took over at the troubled supermarket at the beginning of this month said he would take "decisive action as the results of the investigation become clear".
The company's chairman Richard Broadbent has said that he will not step down over the scandal.
Tesco has already issued three profit warnings this year, increasing concerns among investors. Last year Tesco announced its first annual profit drop in two decades due to strong opposition from discount supermarkets such as Aldi and Lidl and competition from Waitrose at the other end of the market.
-
Should you add your child to your credit card?The Explainer You can make them an authorized user on your account in order to help them build credit
-
Cracker Barrel crackup: How the culture wars are upending corporate brandingIn the Spotlight Is it 'woke' to leave nostalgia behind?
-
'It's hard to discern what it actually means'Instant Opinion Opinion, comment and editorials of the day
-
The UK’s Christmas egg shortagefeature Supermarkets blame bird flu but farmers say unfair buying practices are driving them out of business
-
Tesco to reward lockdown temps with 16,000 permanent jobsSpeed Read The supermarket giant has more than doubled online capacity since lockdown amid boom in demand
-
How coronavirus put the weekly shop back in vogueSpeed Read Tesco boss says transactions have halved as basket size doubles
-
Coronavirus: supermarkets start rationing to combat panic buyingSpeed Read Stockpiling has led to empty shelves at some UK supermarkets - but shortages may be short-lived
-
Tesco blames falling bread demand for 1,800 job cutsSpeed Read Supermarket chain's announcement comes after rivals trimmed workforces
-
Tesco to sell plasters in diverse skin tonesSpeed Read Move to diversify plaster offering follows viral tweet last year
-
Tesco facing Christmas card forced labour claimsSpeed Read Six-year old’s discovery of a note from prisoners in a Chinese gulag puts spotlight on retailer’s relationship with suppliers
-
Sales of Christmas puddings down on 2018Speed Read Supermarket data shows slump in demand for festive food
