SUPERMARKET giant Tesco has seen its shares slump by 11 per cent following an embarrassing quarter of a billion pound accounting mistake. The UK supermarket chain admitted that they overstated expected profits by £250 million (€318m); a gaffe that has already resulted in a number of executives being suspended from duties as an investigation into the error is launched.
Profits at Tesco have been dropping for the last two years thanks in part to competition from low-cost rivals Lidl and Aldi, and Tesco had already predicted a drop in profits of £400 million (€508m) for this year. It predicted a half-year trading profit of around £1.1 billion (€1.39bn), but this figure has been slashed by £250 million (€317m) following the realisation that the total had been overestimated. This now leaves Tesco’s profits down by around 46 per cent on last year’s figures.
Accounting firm Deloitte has been brought in to conduct an investigation into the mistake that has shareholders up in arms. Shore Capital Stockbrokers analyst Clive Black told the Daily Mail: “These are serious times for Tesco and its shareholders. We are flabbergasted by this development.” Tesco’s shares have dropped to their lowest level in 11 years following the mistake.