Tesco parachutes in new finance boss to fix accounting scandal

Tue Sep 23, 2014 11:07am EDT
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By James Davey

LONDON (Reuters) - Tesco rushed its new chief financial officer into place on Tuesday, 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 (MKS.L: Quote) early in the summer but he was not due to start until December. Tesco's - also new - chief executive Dave Lewis said on Tuesday 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 (TSCO.L: Quote) finances after Monday's revelation that the firm's first half profit forecast had been overstated by 250 million pounds ($409 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 pounds off Tesco's stock market value.

Its shares added another 4 percent to Monday's 12 percent drop after industry sales data on Tuesday 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 Oct. 1 to Oct. 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.   Continued...

File photograph shows grey clouds hanging over a Tesco Extra store in New Malden southwest London June 4, 2014.  REUTERS/Luke MacGregor/Files