Tesco suspends staff after £250m profit bombshell

Alexander Newton

Tesco has suspended four executives after it emerged the supermarket group had overstated profits by £250 million. Tesco chief executive Dave Lewis confirmed the Financial Conduct Authority was investigating the matter.

At 9.20am shares in Tesco were down 7.7% at 211.8p, increasing the firm’s loss to 36% this year.

Lewis said the overstatement was brought to his attention by a whistleblower on Friday afternoon. He said he did not feel he was misled by the company before replacing former chief Philip Clarke at the start of this month.

‘I do not feel I was misled,’ Lewis said. ‘This is completely out of ordinary and is a matter we take very seriously. I will deal with this matter decisively and quickly.’ ‘While this is matter of regret, Tesco is an important company and I’m still involved in the engagement of its future, which is a privilege.

‘This is not a welcome event and nobody here is having a good day. This company needs and deserves to be delivered to its full potential.’

In a statement to the London Stock Exchange earlier in the day Tesco said the overstatement was principally due to accelerated recognition of commercial income and delayed accrual of costs. The supermarket chain is in the process of trying to establish the extent of the issues and what impact they will have on the full year.

Lewis said: ‘We have uncovered a serious issue and have responded accordingly.

‘The chair and I have acted quickly to establish a comprehensive independent investigation. The board, my colleagues, our customers and I expect Tesco to operate with integrity and transparency and we will take decisive action as the results of the investigation become clear.’