MORE DAMNING REVELATIONS about Tesco’s lack of corporate governance and a poisonous culture of fear at the top have emerged as the beleaguered supermarket group continues to reel from its £250m half-yearly profit overstatement.
Kicking off is The Sunday Times, which revealed that the whistleblower had previously tried to flag-up his concerns during former chief executive Philip Clarke’s reign but had ‘failed to get traction’.
The Sunday Telegraph reports that a senior source told the paper that a ‘corruption of virtues’ had made people ‘go over lines that basic values suggest they shouldn’t have’.
The Independent points to a culture during Sir Terry Leahy and Phil Clarke’s time where “targets were king and to miss them would lead to a dressing down that could make Sir Alex Ferguson’s hairdryer treatment look mild”.
Fallout from the Tesco scandal and a closer interest by shareholders into the performance of its supermarket peers now looks likely to be focussed on J Sainsbury which is expected to reveal a drop in like-for-like sales of up to 4% this week.
The mid-market group has, like Tesco, been under increasing pressure from discounter success stories, Lidl and Aldi.
Analysts are widely predicting that Sainsbury’s will slash its dividend while some have even mooted the spectre of raising extra cash through a rights issue at Tesco’s rival could be on the cards.
Tesco has already called in Deloitte and legal adviser Freshfields to probe an “overstatement of its expected profit for the half year, principally due to the accelerated recognition of commercial income and delayed accrual of costs” on 22 September.
It also suspended four senior executives including its finance director and managing director, while it probes its latest crisis that has seen its shares hit an 11-year low and have plunged some 40% in the last year.
Tesco was last audited by PwC, which has kept the Tesco brief since 1983.
Just four weeks ago, on August 29, Tesco issued a warning to investors that its profits would be in the region of £1.1bn for the six months to 23 August, dramatically down from £1.6bn the previous year.
The revelation means that Tesco’s first-half profits look set to be even worse at around £850m.
Tesco had planned to publish its half yearly results on Wednesday (1 October), but these have now been pushed back to 23 October.
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