Tesco just rushed a new CFO into position, after yesterday’s 12% share price slump.
The scandal-hit retailer is in an unenviable position: its former chief financial officer resigned in April and its finance director was suspended yesterday, after a massive accounting blunder that led to the firm overestimating first half profits by £250 million, a 23% exaggeration.
Alan Stewart becomes the board’s CFO today, instead of in December as originally planned. He replaces Laurie McIlwee, who resigned from the retailer in April and left just over a week ago according to the BBC.
Stewart was Marks & Spencer’s former CFO on “gardening leave,” and wasn’t due to be released until later in the year.
Chairman Richard Broadbent also admitted that he may be forced to resign, following the suspension of four other senior executives, The Telegraph reported:
Sir Richard insisted he would not resign as chairman, despite the profit warning. “Things are always unnoticed until they have been noticed,” he said. “Shareholders will have to decide whether I am part of the problem or part of the solution. This is not a welcome event. No one here is having a good day today.”
There’s no relief in the markets, either. Tesco shares are down another 2.49% at the time of writing, pushing below the £2 for the first time since 2003. The share price is down by about 47% in just 12 months.
Tesco’s problems aren’t new. The firm massively expanded its market share in the late 1990s and early 2000s, but it stagnated afterwards:
It struggled to break significantly past the 30% mark and has dropped below since. It’s down to 28.8%, the lowest level in about a decade.
Despite the retailer’s enormous size, the share price and market share numbers make it seem like a business starting to decline. If that wasn’t a problem enough for new chief exec Dave Lewis, there are a huge number of unanswered questions about yesterday’s shock announcement.
Why were warnings back in May that Tesco’s accounts were “at risk of manipulation” judged not to be “a significant issue for disclosure”? What did McIlwee know before he resigned? And if there was a whistleblower, as Lewis suggested, why did this person only come forward after the company got a new CEO?