The chairman of Britain's biggest retailer Tesco resigned today as the troubled supermarket group said a huge accounting error began earlier than thought and contributed to plunging profits.
Richard Broadbent said he would be stepping down after an independent investigation found that Tesco had overstated profits by 263 million pounds (USD 422 million, 334 million euros) as a result of accounting errors stretching back to before 2013.
"The board's immediate focus must be on ensuring that we complete the transition to a new management team and that new and far-reaching business plans are put in place quickly," Broadbent said in a statement that also revealed Tesco's net profit had crashed to just 6.0 million pounds in its first half from 820 million pounds one year earlier.
Tesco, the world's third-biggest supermarket group, stunned investors one month ago when it revealed that its profit forecast for the six months to August 23 was overstated by an estimated 250 million pounds.
Following an independent probe by accountants Deloitte, the final figure was put at 263 million pounds, which includes overstatements of 70 million pounds for Tesco's last financial year and 75 million pounds relating to pre-2013/14.
"The issues that have come to light over recent weeks are a matter of profound regret. We have acted quickly to clarify the financial performance of the company," Broadbent said in the statement.
"A new management team is in place to address the root cause of the mis-statement and to develop and implement the actions that will build the company's future."
He added: "Once this transition is complete and business plans are in place, it will mark the beginning of a new phase for the company, and I will begin now to prepare the ground to ensure an orderly process for my own succession at that time."
Tesco has suspended eight executives since recently-appointed chief executive Dave Lewis launched an inquiry into the accounting error that has triggered a separate probe by British regulator the Financial Conduct Authority (FCA).
Tesco's shock profits warning last month also sent its share price sliding and caused US billionaire investor Warren Buffett's investment company to cut its holdings in the group.
The group's share price closed down 6.56 per cent at 171 pence on London's benchmark FTSE 100 index, which finished 0.30 per cent up at 6,419.15 points.
