Tesco‘s shares crashed to an 11-year low yesterday after the supermarket warned it may have overstated profits by £250m.
The beleaguered group saw its share price slide 11.6 per cent, down 26.6p to 203p after it was plunged into fresh turmoil following the suspension of four UK executives while it investigates its profits.
The group admitted that its most recent profits warning in August was much too optimistic.
UK managing director Chris Bush is believed to be among four directors asked to step aside while accountancy firm Deloitte carries out an “independent and comprehensive” review into the overstatement.
The inquiry will look into the way the company treated rebates paid by suppliers and whether they were reported in the right time period.
The error was brought to the attention of Tesco’s general counsel by a whistleblower on Friday before being passed to new chief executive Dave Lewis.
He carried out a preliminary investigation over the weekend before issuing Tesco’s third profits warning in as many months yesterday.
Tesco has alerted City regulator the Financial Conduct Authority and asked Freshfields, the group’s external legal adviser, to work with Deloitte.
Mr Lewis said the suspensions would allow the company to carry out a “full and frank” investigation and was not disciplinary or an indication of guilt.
The former Unilever boss, who took over from Tesco veteran at the start of the month, has placed online director Robin Terrell in charge of running the UK team.
“The suspensions add to Tesco’s difficulties at a time when it is grappling with the growth of discounters.
Tesco’s results will now be announced on October 23 rather than October 1.
Mr Lewis said: “We have uncovered a serious issue and have responded accordingly.”
Shore Capital Stockbrokers analyst Clive Black said: “These are serious times for Tesco and its shareholders.
“We are flabbergasted by this development and have no choice but to put our “hold” stance, which we only went up to through Mr Lewis’ appointment, under review.”