Tesco (TSCO.L) has lowered its forecast for first-half profit by 250 million pounds ($408.50 million), its third warning this year, after finding a fault in its accounts, in the latest blow to the reputation of Britain's biggest grocer.
The firm said its Aug. 29 profit warning overstated expected first half profit by 23 percent, an error discovered during preparations for its forthcoming interim results, which have now been pushed back to Oct. 23, from the previously stated Oct. 1.
Tesco had said on Aug. 29 it expected trading profit for the six months ending Aug. 23 to be in the region of 1.1 billion pounds.
"Tesco has identified an overstatement of its expected profit for the half year, principally due to the accelerated recognition of commercial income and delayed accrual of costs," it said.
"Work is ongoing to establish the extent of these issues and what impact they will have on the full year."
Tesco has asked Deloitte to undertake an independent and comprehensive review of the issues, working closely with Freshfields, its external legal advisers.
The interim results will be the first time the market hears from new Chief Executive Dave Lewis, who succeeded Phil Clarke on Sept. 1.
"We have uncovered a serious issue and have responded accordingly. The chairman and I have acted quickly to establish a comprehensive independent investigation," Lewis said on Monday.
"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."
With a market valuation of 18.8 billion pounds and over 500,000 employees, Tesco had been the darling of the sector during two decades of uninterrupted earnings growth.
But under Clarke it issued three profit warnings in two and a half years as it lost UK market share to fast-growing German discounters Aldi [ALDIEI.UL] and Lidl [LIDUK.UL] as well as upmarket rivals Waitrose [JLP.UL] and Marks & Spencer (MKS.L), leaving its share price languishing at decade lows.
The stock closed Friday at 229.8 pence
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