Tesco is facing the worst crisis in its 95-year history after it revealed an accounting error meant profits for the half year had been inflated by £250 million.
The shock admission wiped more than £2bn off the value of the supermarket giant and four senior executives have been suspended as the investigation continues.
We give you a breakdown of Tesco's six months of hell:
Chief finance officer Laurie McIlwee is dumped by the company following bust-ups with chief executive Phil Clarke over the direction the company is heading. Insiders blame Mr McIlwee for making a promise to investors that margins will stay at 5.2 per cent. Tesco dropped the promise in February. A few weeks later the supermarket revealed full-year profits fell for a second year in a row. Executives told they will not receive a bonus.
Tesco’s Turkish operation, which is struggling, fails to find a local partner to help save the business, leading to stores outside major cities slated for closure. Mr Clarke also reveals a joint venture in China after a nine-year solo project to establish Tesco fails.
First quarter UK sales fall 3.8 per cent, on a like for like basis. Mr Clarke calls it the worst set of numbers in his 40 year career at the company, despite spending £1bn on store revamps and price cuts. Analysts point out the fall would have been 4 per cent if Tesco excluded fuel, VAT and sales paid in vouchers in its figures.
Marks & Spencer’s finance director, Alan Stewart defects to Tesco but is told he must wait until December before he can join. Meanwhile two weeks later Mr Clarke is sacked following a profit warning, leaving the board devoid of any executives. His 40 year anniversary party at the Victoria & Albert museum is cancelled.
Tesco’s chairman issues a second profit warning and unilaterally gets new boss Dave Lewis, who joins from Unilever, to start a month earlier than expected. The profit warning also comes with news of a 75 per cent cut to the interim dividend and cuts to store refurbishments.
Mr Lewis starts and within three weeks has been told by a whistleblower that £250m has been “overstated” due to some creative accounting. A third profit warning is declared, an investigation is launched and four senior executives are suspended.
Share prices plunge by 12 per cent to new 11-year lows and continue falling as new CFO Mr Stewart is rushed in three months early after Mr Lewis pleads to M&S boss Marc Bolland to release him from his contract.Reuse content