Tesco chairman quits as profits hole deepens and sales and profits fall

Sir Richard Broadbent: Tesco chairman stands down
Sir Richard Broadbent: Tesco chairman stands down

Tesco chairman Sir Richard Broadbent has fallen on his sword as the beleaguered supermarket group announces a bigger-than-anticipated profit shortfall.

The group, which had previously estimated the shortfall at £250m, said that it had mis-forecast its profits by £263m.

In a triple whammy of bad news for Tesco, the supermarket also announced plummeting sales and profits for its first half. Like-for-like sales, excluding petrol, fell 4.5% and pre-tax profit plummeted 92% on the previous year to £112m.

Deloitte has completed its investigation into Tesco’s misreporting, which has so far seen several senior executives suspended and now, in conjunction with ailing performance, has led to Broadbent’s resignation. The accountancy firm found that profits were overstated by £118m in the first half of 2014, by £70m in the 2013/14 financial year, and by another £75m in 2012/13.

Broadbent, who joined as chairman in November 2011, said: "The issues that have come to light over recent weeks are a matter of profound regret. We have acted quickly to clarify the financial performance of the company."

"A new management team is in place to address the root causes of the mis-statement and to develop and implement the actions that will build the company's future."

He added that he was preparing the ground for a successor and that his decision to stand down reflected the "important principle of accountability".

Commenting on Tesco's latest results, chief executive Dave Lewis said: "Whilst my review of the whole business continues, three immediate priorities are clear: to recover our competitiveness in the UK; to protect and strengthen our balance sheet, and to begin the long journey back to building trust and transparency into our business and brand."

Lewis recently sent staff an email reassuring them that "nothing takes away from the huge amount of passion and expertise" at the retailer and pledging to change the business culture.

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