Tesco Suspends Three More Workers Amid Accounting ProbePaul Jarvis
Tesco Plc, the largest U.K. supermarket chain, suspended three more employees amid a widening independent probe into a potential 250 million-pound ($400 million) overstatement of a profit estimate.
The three have been asked to step aside to “facilitate the investigation,” spokesman Tom Hoskin said, without naming them. It brings to eight the number of workers that have been relieved of their duties for the moment.
Tesco said Sept. 22 that some income was booked before being earned and costs were recognized later than incurred, meaning that its 1.1 billion-pound projection for first-half operating profit was about 250 million pounds too high. The grocer, whose shares have slid to an 11-year low amid falling sales and market share, called in Deloitte LLP and Freshfields Bruckhaus Deringer LLP to conduct an independent investigation.
“The deeper and more prolonged the accounting investigation becomes, the more distracting it will be for the U.K. business on the run-up to Christmas,” Nick Bubb, an independent retail analyst, said by e-mail. “Sainsbury and the other key rivals will be looking to exploit Tesco’s problems.”
The shares fell 1 percent to 178.75 pence as of 1:05 p.m. in London. They have slumped about 47 percent this year.
The latest employees to be suspended are U.K. and group wine director Dan Jago, William Linnane, the category director for impulse food, and Sean McCurley, category director for convenience, Sky News reported, without citing anyone.
Tesco will provide an update on the probe when it reports its delayed first-half earnings on Oct. 23, Hoskin said.
The grocer’s accounting error has attracted the attention of bodies including the U.K. Financial Conduct Authority, which said this month that it is investigating. The Financial Reporting Council, a watchdog with powers to make companies restate their accounts, is also looking into the matter.