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Tesco chairman steps down after overstating profits

By Aileen Graef
Tesco is a British-based multinational grocery retailer. (UPI Photo/Stephen Shaver)
Tesco is a British-based multinational grocery retailer. (UPI Photo/Stephen Shaver) | License Photo

LONDON, Oct. 23 (UPI) -- Tesco chairman Richard Broadbent announced his resignation Thursday amid the discovery that the British grocery chain had overstated profits, which had dropped 47 percent from the previous year.

Tesco said Thursday they company overestimated its profits by £263 million ($423 million) with a £118 million ($189 million) shortfall the first half of 2014.

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"The issues that have come to light over recent weeks are a matter of profound regret," Broadbent said in a statement. "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."

Chief Executive Dave Lewis is expected to compose a new strategy for the retailer, which he said will be revealed to customers before the media.

Tesco has been doing deals with suppliers over promotions and then booking returns for the promotions too early while shelving the costs, an investigation revealed.

Warren Buffet invested in Tesco and called the stock purchase a "huge mistake."

"My decision 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 said.

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