- Tesco, the largest grocer in the UK, said it had inadvertently overstated its profit guidance for the remainder of the year by roughly $408 million.
- The retailer suspended four executives, including the chief of UK operations, and has brought in outside auditors to investigate.
- The news comes as Tesco continues to lose market share to discount grocers such as Aldi and Lidl, which have dramatically altered the supermarket landscape in England.
How could something like this happen? We'll leave it to the investigators (Deloitte on the accounting side and Freshfields on legal) to sort through the details. As for what happens next ... that's pretty easy to predict. Tesco brought on a new chief executive officer on Sept. 1. His name is Dave Lewis. His nickname, earned during a purge and cost-cutting when he was at Unilever, is "Drastic Dave."
We'll look for cuts — including the firing of executives, reduction in headcount, and slashing of expenses — as Drastic Dave tries to restore order.