The chairman of Tesco is to stand down after Britain’s biggest retailer reported a 92% fall in pre-tax profits and revealed that the accounting black hole in its profits is larger than expected.
Britain’s biggest retailer said in its half-year results that the black hole in its profits was £263m, larger than the £250m initially forecast.
Sir Richard Broadbent, chairman of Tesco, said he would stand down once new chief executive Dave Lewis has established his strategy for the company, which is likely to be next year.
He said: “My decision reflects the important principle of accountability on behalf of the board and will support the company to draw a line under the past as it enters the next phase of its development.”
Shares in Tesco tumbled by 6% in early trading after the company published its results.
Clive Black, analyst at Shore Capital, said: “We can never recall a period so damaging to the reputation of the company.”
Tesco has been rocked by the biggest crisis in its history after the discovery of a black hole in its profits. The retailer said that accounting firm Deloitte has completed an investigation into the scandal, which will now be handed to the Financial Conduct Authority, the City regulator.
The company has declined to comment on the causes of the black hole, saying it will leave the FCA to establish where the responsibility lies.
Sir Richard said that Mr Lewis is now considering a range of strategic options and potential asset sales to help Tesco bounce back from the scandal and a sharp fall in UK sale.
The chairman said: “He is reviewing all aspects of the group in order to improve its competitive position and deliver sustainable returns.
“Consideration will be given to all options which increase flexibility and create value for customers and shareholders.”
The Telegraph understands that Tesco is considering a spin-off of its Asia business.
Tesco reported that pre-tax profits fell by 92% to £112m. This was on the back of the accounting scandal, but also a 4.6pc fall in like-for-likes in the UK.
Tesco has suspended eight executives, including UK boss Chris Bush, as part of the investigation into the black hole. They will remain suspended as the FCA investigates Tesco.
Mr Lewis said Tesco is “operating in challenging times”.
He added: “Trading conditions are tough and our underlying profitability is under pressure.
“We do however face these challenges from a position of market strength and I have been heartened by the team’s welcome and their determination to stay focused on doing the very best for our customers.
“Whilst my review of the whole business continues, three immediate priorities are clear: to recover our competitiveness in the UK, to protect and strengthen our balance sheet and to begin the long journey back to building trust and transparency into our business and brand.”