LONDON (Reuters) – Tesco reported a bigger than expected hole in its finances on Thursday after finding accounting mistakes had gone back further than initially thought, forcing Britain’s biggest grocer to scrap its full-year profit outlook.
Tesco, once the unstoppable juggernaut of the British retail sector, has lost half of its market value this year after the accounting misstatement compounded earlier profit warnings to create a sense of panic at Britain’s biggest private employer.
Chief Executive Dave Lewis, drafted in on Sept 1, said he could no longer provide a full-year profit forecast because he did not know the scale of Tesco’s problems or how much it would cost to rebuild the world’s third largest grocer.
With net debt rising, the pension deficit expanding and trading in its home market deteriorating at an alarming rate, the 95-year-old group said it was looking at all options to raise cash. Its shares fell 6 per cent to an 11-year low.
“Our business is operating in challenging times,” said Lewis, who joined Tesco from supplier Unilever. “Trading conditions are tough and our underlying profitability is under pressure.”
“The UK, the balance sheet, trust and transparency and the brand of the business will be the priorities for now,” he said.
Tesco said the overall impact from the incorrect booking of income was 263 million pounds ($421 million), up from an original estimate of 250 million pounds but that nobody had gained financially from the overstatement of profits.