October has not started off well for beleaguered Tesco. This morning, the Financial Conduct Authority (FCA) confirmed the launch of a full investigation into the supermarket following last month's profit overstatement.
On 22 September, Tesco warned investors that its profit outlook for the half year to August had been overstated by £250m. It blamed this on the “accelerated recognition of commercial income and delayed accrual of costs.”
It had been a testing few months for the retailer leading up to this – in August, the struggling supermarket issued a profit warning, saying it expected half year results to be in the region of £1.1bn. Prior to that it reduced full-year forecasts from £2.8bn to £2.4bn, resulting in a share price plunge of eight per cent. Share price is likely to fall once again following this latest announcement.
In a regulatory update, Tesco said it will “continue to co-operate fully with the FCA and other relevant authorities considering this matter.”
Shares were down 3.28 per cent in early trading.