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Tesco asks fifth executive to step aside after profit error | Tesco asks fifth executive to step aside after profit error |
(about 2 hours later) | |
UK supermarket giant Tesco has asked a fifth executive to step aside, as the fall-out from its £250m profit forecast overstatement continues. | UK supermarket giant Tesco has asked a fifth executive to step aside, as the fall-out from its £250m profit forecast overstatement continues. |
Commercial director Kevin Grace has been asked to step aside while Tesco investigates the matter. | Commercial director Kevin Grace has been asked to step aside while Tesco investigates the matter. |
Four other executives have already been asked to step aside, including UK managing director Chris Bush. | Four other executives have already been asked to step aside, including UK managing director Chris Bush. |
Chief executive Dave Lewis has launched an investigation in the accounting error. | Chief executive Dave Lewis has launched an investigation in the accounting error. |
Mr Lewis, who took over the role from from Philip Clarke on 1 September, has seen billions wiped off the value of Tesco's stock market value as a result of the mis-reporting. | Mr Lewis, who took over the role from from Philip Clarke on 1 September, has seen billions wiped off the value of Tesco's stock market value as a result of the mis-reporting. |
But he has made clear that the actions taken against the Tesco executives are not "disciplinary or an admission of guilt." | But he has made clear that the actions taken against the Tesco executives are not "disciplinary or an admission of guilt." |
Accountancy firm Deloitte and law firm Freshfields are carrying out the internal investigation. | Accountancy firm Deloitte and law firm Freshfields are carrying out the internal investigation. |
But last week, Tesco said it had been notified by the Financial Conduct Authority that it was under investigation over the guidance error. | But last week, Tesco said it had been notified by the Financial Conduct Authority that it was under investigation over the guidance error. |
Tesco's share price has plummeted 50% in a year, as falling sales, boardroom reshuffles, and increased competition from rival supermarkets such as Aldi and Lidl, have spooked investors. | Tesco's share price has plummeted 50% in a year, as falling sales, boardroom reshuffles, and increased competition from rival supermarkets such as Aldi and Lidl, have spooked investors. |
This week Mr Lewis refreshed his board with the appointment of Compass boss Richard Cousins and former Ikea boss Mikael Ohlsson as non-executive directors. | This week Mr Lewis refreshed his board with the appointment of Compass boss Richard Cousins and former Ikea boss Mikael Ohlsson as non-executive directors. |
Tesco still has a 28.8% share of the UK grocery market, according to retail analyst Kantar Worldpanel. | Tesco still has a 28.8% share of the UK grocery market, according to retail analyst Kantar Worldpanel. |
'Weaker player' | |
Tesco veteran Andrew Higginson told a grocery conference on Tuesday that the company's recent turmoil was not good for the sector as a whole. | |
"Tesco has been a weaker player the last couple of years, which has made the industry weaker," he said. | |
"Competition is good for you." | |
Mr Higginson, formerly Tesco's finance director, will become the chairman of rival Morrisons early next year. | |
In a straight talking speech at the IGD Convention, he said the big four supermarkets had lost customers' trust on pricing. | |
"The marketing dialogue of the last four years has astonished me really," he said. | |
"It's the big four talking to each other, not talking to customers. | |
Mr Higginson added that retailers needed to rejuvenate their relationships with suppliers, and boardrooms needed to be "more honest and have less hubris" about their business. | |
But he also believed that although the sector was going through extraordinary times, it would recover. | |
"Supermarkets and food retailers are not dead." |