Tesco reports $408 million profit error
Tesco, the UK's largest supermarket group, overstated its profits by $408 million. Jim Boulden explains what went wrong.

Tesco was once the British retailer which would do no wrong. Now the world’s third largest food retailer has had to admit it mistakenly booked an extra 400 million dollars in expected profits in the first half of the year. Four executives, some believed to be from Tesco’s UK food division, have temporarily stepped aside while an outside auditor and law firm investigate. Tesco CEO Dave Lewis has been in the job for a grand total of three weeks. He says he was told about the irregularity on Friday after an employee alerted senior staff that something was terribly wrong.
To be disappointed would be an understatement. It’s not what I would have expected. I don’t think it’s what anybody would have expected. But I will deal with it. It’s a challenge for us as a business and it’s part of leading a business like ours that I have to deal with any issue that comes, whether I expected or not. It doesn’t take me away from what it is I think we can build with Tesco, not at all.
Tesco, every little helps.
In this case, a little extra profit has not helped. Tesco grew out of Britain to become one of the world’s largest retailers by focusing on building huge stores and cutting prices. But now in the UK it’s been undercut by even cheaper rivals and spent more than a billion dollars revamping UK stores and cutting back on international expansion, including closing its operations in the US. It has had three CEOs since 2010. The retailers also issued numerous profit warnings. Now its shares fell heavily in London trading on Monday, closing down 11.5%, and now faces the possibility of a massive financial scandal, hitting the one-time British darling.
Jim Boulden, CNN, London.