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Tesco says it overstated profit forecast by £250m | Tesco says it overstated profit forecast by £250m |
(35 minutes later) | |
Tesco has launched an investigation after it found it had overstated its expected profit for the half year by £250m. | |
The supermarket chain said it was now working to establish the impact of the issue on its full-year results. | |
It had expected £1.1bn profit for the half year. It has appointed Deloitte to independently investigate the issue. | |
"We have uncovered a serious issue and responded accordingly," said Tesco chief executive Dave Lewis. | |
Mr Lewis, who took the helm at Tesco on 1 September, said he expected the group "to operate with integrity and transparency". | |
"We will take decisive action as the results of the investigation become clear," he added. | |
In a statement, Tesco said the overstatement was "principally due to the accelerated recognition of commercial income and delayed accrual of costs". | |
It also said some of the error - referred to its expected profits for the six months to 23 August - was due to "in-year timing differences". | |
The error emerged when the firm was preparing its interim results. | |
It had originally planned to publish these on 1 October, but they have now been pushed back to 23 October. | |
Deloitte will carry out its investigation with Freshfields, the group's external legal advisers. | |
Profit warning | |
Shares in Tesco reached an 11-year low in August after the firm cut its full-year profit forecast to £2.4bn from £2.8bn. | |
The supermarket group has been battling falling sales and a decline in its market share as discount chains such as Aldi and Lidl have gained in popularity. | |
Previous chief executive Philip Clarke stood down in July after his attempts to revive Tesco's fortunes through a £1bn turnaround plan failed. | |
AvaTrade chief market analyst Naeem Aslam said Tesco had been "extremely slow" to respond to market changes. "Today's news is another disaster for the company," he added. |