Tesco share price falls again: Chairman Sir Richard Broadbent steps down
It has been a tough few weeks for Tesco, but just how tough was revealed in first-half results posted this morning, which showed statutory profit before tax, which includes one-off items, collapsed by 91.9 per cent to £122m in the 26 weeks ended 23 August 2014.
Shares dropped 5.5 per cent in early trading as Sir Richard Broadbent, Tesco’s chairman, announced he will step down, while the embattled supermarket admitted an independent investigation by Deloitte had found it had understated its £250m profit “overstatement” to the tune of £13m: the final figure came in at £263m.
The accounting error concerned Tesco’s method of booking payments from deals with food suppliers early while at the same time pushing back the recognition of costs.
Tesco chief executive Dave Lewis, who has been in the job just 53 days, 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”.
Lewis said this morning there was no evidence that the grocer’s massive profit overstatement was done “for personal gain”.
However, current Tesco bosses aren’t the only ones who are starting the day with bad news. Former Tesco CEO Philip Clarke and finance director Laurie McIlwee will not be receiving payoffs due to them until the end of an investigation by the Financial Conduct Authority (FCA).
Broadbent, who took control of the board in 2011, said:”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”.
Source: cityam-Tesco share price falls again: Chairman Sir Richard Broadbent steps down
