Blunder forces Tesco to lower profit forecast 25 %

Blunder forces Tesco to lower profit forecast 25 %

British retail giant Tesco has announced that its operating profit for the first six months (until 23 August 2014 will be much lower than expected. The British market leader will investigate how the reporting system failed to retrieve the correct numbers.

New CEO has false start

 

Tesco had announced on 29 August that its 6-month profit for its current fiscal year would reach 1.1 billion pound sterling (1.4 billion euro), but the company announced this morning that the forecast was way too high, by some 250 million pounds (320 million euro).

 

It was a false start for Tesco's new CEO, David Lewis, as the company missed its profit forecast by 23 %. "We have uncovered a serious issue and have responded accordingly. The Chairman and I have acted quickly to establish a comprehensive independent investigation", the CEO stated in a press release.

 

Tesco has appointed Deloitte's accountants to research its reporting system, instead of its regular team of external pwc overseers. It will also request the help from Freshfields, its team of external legal advisers. 

 

4 directors suspended

 

Lewis emphasized that "the Board, my colleagues, our customers and I expect Tesco to operate with integrity and transparency and we will take decisive action as the results of the investigation become clear." The company has already suspended 4 senior managers from active duty. It seems Chris Bush, Tesco UK's managing director, is one of them.

 

Lewis has to do everything he can to appease the shareholders as they are unconvinced by Tesco's attempts at integrity and transparency. Tesco's share has been hit hard after the news broke.

 

Tesco will release new numbers on 23 October and it will take the negatively altered numbers into consideration.

Questions or comments? Please feel free to contact the editors


Shoe brand Bally put up for sale

16/08/2017

Austrian investment firm JAB Holding wants to sell Swiss shoe brand Bally, hoping to get at least 600 million euro. The same company sold shoe brand Jimmy Choo not too long ago.

Crocs loses patent battle

14/08/2017

Shoe manufacturer Crocs has lost a patent court case revolving around the shoe’s design. According to the American Patent & Trademark Office (USPTO), another company has had a similar design for much longer.

Coolcat's losses compound

14/08/2017

Dutch fashion chain Coolcat, part of entrepreneur Roland Kahn’s group, has not managed to lower its losses in 2016. On the contrary: its losses grew more than 50 % compared to the year before.

Zalando's growth once again surpasses 20 %

10/08/2017

German Zalando has achieved its 20 % growth target for the second quarter, but just barely. It still forecasts a 20 to 25 % growth for its full fiscal year.

Gucci files lawsuit against Forever 21

09/08/2017

Fashion label Gucci has decided to file a lawsuit against fashion chain Forever 21 in the United States. The case revolves around several pieces of clothing, all with a blue-red-blue or green-red-green ribbon. 

Ralph Lauren outperforms expectations

08/08/2017

Fashion label Ralph Lauren’s first quarter was a very good one, as it beat both analysts’ turnover and profit forecasts. It is quite a turnaround for a company that suffered a huge loss only a year ago.

Back to top