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CHESHUNT, England — Tesco PLC chairman Richard Broadbent has announced plans to step down from his post at the company, Britain’s largest retailer, following the revelation of accounting irregularities and falling sales in its home market.
Tesco PLC chairman Richard Broadbent has announced plans to step down from his post at the company, Britain’s largest retailer, following the revelation of accounting irregularities and falling sales in its home market.
No timetable was given for the departure of Broadbent, who said he would leave once the transition to a new management team is complete and a new business plan is in place.
Tesco announced Thursday that it had overstated profits by 263 million pounds, or about $423 million. That is up from its previous estimate of 250 pounds. Same-store sales in the United Kingdom declined 4.6% in the quarter, due to increased competition. Total sales were down by 4.4% in the second quarter, and Tesco’s underlying profit before tax fell by 46.6%.
"The issues that have come to light over recent weeks are a matter of profound regret," Broadbent said in a statement. "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 misstatement and to develop and implement the actions that will build the company’s future. I am confident that the new chief executive and chief financial officer will move rapidly and effectively in this respect."
David Lewis, who joined Tesco last month as chief executive officer, said the company is operating in challenging times.
"Trading conditions are tough, and our underlying profitability is under pressure," Lewis said. "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.
"Whilst my review of the whole business continues, three immediate priorities are clear: to recover our competitiveness in the U.K., to protect and strengthen our balance sheet, and to begin the long journey back to building trust and transparency into our business and brand.”
