Tesco’s Overestimated Profit Less Than £250m

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LONDON, Oct 20 – The world’s third largest retailer, Tesco, will state next week that it overestimated earnings by less than the £250 million (RM1.3 billion) which it previously announced, Sky news reported on Saturday, citing a banking source. Sky said on its website when the group reports its delayed first-half results next Thursday, the gap would fall “somewhere close to the middle” between £200 million and £250 million.

The 95-year-old supermarket chain is suffering its worst-ever crisis after issuing three profit warnings in 64 days this year. It said in September that an accounting mistake had overvalued its first-half profit by £250 million. The firm is expected to update the market on Thursday into the progress of its own investigation into the error being conducted by auditors Deloitte and law firm Freshfields.

Over the last year Tesco’s big out-of-town stores have lost favour as shoppers buy more produce locally and online, while discounters Aldi and Lidl and upmarket chains Waitrose and Marks & Spencer squeeze the middle ground. Sky also reported that Tesco had asked the investment bank Greenhill to field offers from parties interested in buying assets, including the customer data specialist Dunnhumby.

Last Friday, chief executive Dave Lewis told staff in an Internal e-mail seen that he expects to be able to give a “clear and accurate indication” of the impact of the accounting mistake when the company reports its results later this week.

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