Troubled Tesco rushes in new finance chief

LONDON — Britain’s biggest retailer Tesco rushed its new chief financial officer into place yesterday, 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.

Mr Alan Stewart, from Marks & Spencer (M&S), is taking up the post more than two months ahead of his scheduled Dec 1 start date, Tesco said yesterday. The former WH Smith finance chief has been on an enforced period of leave from M&S since resigning in July to join Tesco.

A spokesman for M&S said yesterday Mr Stewart had been released early after a request from Tesco’s newly installed chief executive Dave Lewis to M&S boss Marc Bolland. “As a business that operates with integrity, we felt it was the right thing to do,” the spokesman said. Tesco did not pay any compensation for Mr Stewart’s early release, he added.

Mr Stewart, 54, must now set about restoring the credibility of Tesco’s finances after Monday’s revelation that the firm’s first-half profit forecast had been overstated by £250 million (S$518 million). That news, along with the suspension of four senior executives and the company’s decision to call in investigators, has wiped more than £2 billion off Tesco’s stock market value. Its shares plunged as much as 6 per cent yesterday after industry sales data showed no signs of recovery in its key United Kingdom market. This followed a 12 per cent drop on Monday.

“His first task this morning will obviously be to look at Tesco’s accounting practices, but they will need to move on fairly quickly to devise a new strategy to revive the business,” said Mr Bruno Monteyne, an analyst at Sanford C Bernstein. “The accounts will need to be cleaned up and they will be cleaned up, I have no doubt in my mind about that.”

Mr 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. Bernstein Research analyst Bruno Monteyne said new adviser Deloitte and legal adviser Freshfields, brought in by Mr Lewis to investigate the profit overstatement, could well find other issues or the same issues in other countries. “We expect that this isn’t the end of the bad news,” he said.

Investors are also waiting to see how much it will cost new chief executive officer Mr Lewis, 49, to restore the fortunes of a company as well-known in Britain as Wal-Mart is in the United States and reversing a perception among shoppers that its once-loved stores are now dingy, overpriced and populated by rude staff.

The company’s problems have been compounded by the lack of a finance director — the previous chief, Mr Laurie McIlwee, had announced his resignation in April and had not been seen in the office for weeks, chairman Richard Broadbent said on Monday.

Separately yesterday, it emerged that executives at Tesco’s Homeplus business in South Korea, its largest overseas unit, are being investigated over the possible leaking of customers’ personal information. Berkshire Hathaway vice-chairman Charles Munger recently summed up the past seven years of Tesco, saying: “Tesco owned the world … (And) one day, it stopped working so well.” Agencies