The Chairman of Tesco, Sir Richard Broadbent, is to resign after the company overstated its profit by £264m because of accounting errors.
The company miscalculated its income from suppliers and initially announced a hole in its profits of £250m in September. The figure was revised up on 23 October, with the retail giant saying there had been an income shortfall of £118m over the first half of 2014, £75m in 2013 and £70 in previous years.
The UK's largest supermarket chain saw profits collapse, from £1.46bn to £784m. After tax, the figure fell from £1.39bn to £112m.
Broadbent said: "The issues that have come to light over recent weeks are a matter of profound regret. We have acted quickly to clarify the financial performance of the company. A new management team is in place to address the root causes of the misstatement and to develop and implement the actions that will build the company's future."
Tesco's shares tumbled by 6.7% on opening this morning, having already fallen to their lowest level for 11 years since September. They are the worst performing shares on the FTSE 100 and have dropped by an incredible 42.7% over the course of 2014.
He said that he hoped Tesco could mark "the beginning of a new phase" with the restructure and said that his decision to step down "reflects the important principle of accountability on behalf of the board and will support the company to draw a line under the past as it enters the next phase of its development".
Broadbent will remain in his position until the new CEO Dave Lewis and his team are fully operational. A series of senior executives have stood down or been removed from their positions over the accounting scandal over the past month.
In a note, Shore Capital analysts said Broadbent's decision will please shareholders, who have become frustrated at the company's mismanagement.
"Tesco has had quite a few years of challenge and disappointment. However, we can never recall a period so damaging to the reputation of the company as H1 FY2015.
"That a powerhouse of international retailing was reduced to a rudder less corporate entity where downgrade followed downgrade, executive followed executive out of the business, with no effective succession planning, capped by a material accounting issue, reflects to a detrimental extent, to our minds, upon those who are the guardians of Tesco on behalf of its owners," the analysts wrote.
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