Tesco rushed its new chief financial officer into place yesterday, trying to shore up a leadership team badly damaged by the accounting mistake revealed on Monday that knocked millions off the company’s profits and billions from its share price.
Britain’s biggest retailer hired Alan Stewart from Marks & Spencer early in summer but he was not due to start until December.
Tesco’s – also new – chief executive Dave Lewis said yesterday that M&S boss Marc Bolland had now agreed to release Stewart early.
The 54-year-old must now set about restoring the credibility of Tesco’s finances after Monday’s revelation that the firm’s first-half profit forecast had been overstated by £250 million.
That news – effectively Tesco’s third profit warning in two months – along with the suspension of four senior executives and the company’s decision to call in investigators wiped £2 billion off Tesco’s stock market value.
Its shares added another four per cent to Monday’s 12 per cent drop after industry sales data yesterday showed no signs of recovery in its key UK market.
Stewart is expected to immediately start preparing Tesco’s interim results, the date of which was pushed back on Monday from October 1 to October 23. Analysts are bracing for further write-offs and negative news on that date.
“Shareholders should certainly brace themselves for a lot of kitchen sinking,” said independent retail analyst Nick Bubb, referring to the practice of companies that are in trouble of publishing any further bad news to investors in one go.
Bernstein Research analyst Bruno Monteyne said new adviser Deloitte and legal adviser Freshfields, brought in by Lewis to investigate the profit overstatement, could well find other issues or the same issues in other countries.
“We expect that this isn’t the end of the bad news,” he said.
Investors are also waiting to see how much it will cost Lewis to fix the company’s struggling UK operations, which are losing market share to fast-growing German discounters Aldi and Lidl in a grocery market that is growing at its slowest pace for over 20 years.
Tesco remains the worst performer of Britain’s “big four” grocers, which includes Wal-Mart’s Asda, Sainsbury’s and Morrisons.