Tesco suspends four senior executives in wake of $409M overstatement

Tesco suspended four executives on Monday, including its UK managing director, after the supermarket overstated its half-year profit guidance by US$409 million. The amount equates to almost a quarter of its expected profit for the period. It has launched an investigation headed by Deloitte, and says it is now working to establish the impact of the issue on its full-year results. “We have uncovered a serious issue and responded accordingly,” said Tesco chief executive Dave Lewis. Shares fell 8 per cent in early trading.

These are serious times for Tesco and its shareholders. We are flabbergasted by this development.

Clive Black, Shore Capital Stockbrokers analyst

Lewis added “a number of people” had been suspended from duty “to facilitate the fullest and deepest investigation possible” and that Robin Terrell, Tesco’s multi-channel director, would be “stepping in and running and leading the UK leadership team”, but he refused to confirm that UK managing director Chris Bush was one of those suspended. Lewis, who took the helm at Tesco on Sept. 1, said the issue was “something completely out of the ordinary” and his priority was to carry out “a full and frank investigation”.

We will take decisive action as the results of the investigation become clear.

Dave Lewis, Tesco chief executive

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