Tesco says profit forecast was overstated by £250 million
In a trading statement issued today, the supermarket giant said it identified the overstatement during final preparations for its forthcoming interim results, adding that the error was “principally due to the accelerated recognition of commercial income and delayed accrual of costs”.
Tesco also said the overstatement, which relates to profits for the six months to 23 August, was a result of in-year timing differences. Last month, Tesco said trading profit for the period was expected to be around £1.1 billion.
The supermarket has now asked accountancy firm Deloitte to undertake an “independent and comprehensive” review of the issues, while working closely with Freshfields, Tesco’s external legal advisers.
Work is ongoing to establish the extent of the issues and what impact they will have on the full year.
Tesco chief executive Dave Lewis, who joined Tesco earlier this month, said: "We have uncovered a serious issue and have responded accordingly. The chairman 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."
Last month Tesco also said that full-year profit was expected be £2.4 billion to £2.5 billion, down from its previous forecast of £2.8 billion, as it revealed that Lewis would join the group a month early. He succeeded previous chief executive Philip Clarke who stepped down after a series of profit warnings.
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