UK-based grocery chain Tesco announced this morning that it overstated 2014 first half profits by more than $400 million. The stock has dipped more than 10% on the news. The Daily Mail is reporting that Tesco has suspended four of its top managers and brought in global accounting firm Deloitte to investigate. The Mail asserts that some of the obfuscation on profits may have been caused by how Tesco treated rebates and the timing on reporting them. The Financial Times, as well as the Mail, report that a whistleblower apparently informed Tesco’s general counsel on Friday. Must have been a busy weekend for Tesco’s new cost-cutting CEO Dave Lewis.
Mr. Lewis came to Tesco in July from Unilever after former Tesco CEO Philip Clarke was pushed out due to moribund growth at the British supermarket giant. One follower of the debacle, Matt Emerson, Finance & Ops Director at fashion firm orla keily, notes on Twitter that Mark Gill was the “PwC partner who signed Tesco’s accounts in May.” He also points out that Dave Lewis was unlikely to have encountered this kind of thing before, having been on the other side of the retail equation at Unilever.
You may be having a bad day today, but probably not as bad as Mark Gill. He’s the PwC partner who signed Tesco’s accounts in May…
— Matt Emerson (@Mattemerson) September 22, 2014