Tesco chairman steps down amid £263m profits overstatement

Sir Richard Broadbent is to step down as Tesco’s chairman after a gross overstatement of profits totalling £263m.

Accountancy firm Deloitte concluded its investigation into Tesco’s interim results, which found total overstatement to be £263m, of which £118m related to the first half of this year, £70m in the 2013-2014 financial year and £75m before 2013.

Sir Richard announced his resignation in a statement: “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. I am confident the new chief executive and chief financial officer will move rapidly and effectively in this respect.

“Once this transition is complete and business plans are in place, it will mark the beginning of a new phase for the company and 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.”
In the half-year results, Tesco also reported profit before tax fell to £112m, a 91.9% decrease on the same period last year, while like-for-like sales also fell 4.6%

However newly appointed chief executive Dave Lewis remained optimistic in his response to the results, stating the supermarket needed to focus on the customer to regain trust.

“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. While 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.”

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