Tesco accounting black hole to be less than originally stated

LONDON: The world's third largest retailer, Tesco, will state this week that it overestimated earnings by less than the 250 million pounds which it previously announced, Sky news reported , citing an unnamed banking source.

Sky said on its website on Saturday that when the firm reports its delayed first-half results next Thursday, the gap would fall "somewhere close to the middle" between 200 million and 250 million pounds ($322 million and $402 million).

Tesco was not immediately available for comment when contacted by Reuters on Saturday.

The 95-year-old supermarket chain is suffering its worst ever crisis after issuing three profit warnings in 64 days this year. It said in September that an accounting mistake had over-valued first-half profits by 250 million pounds.

The firm is expected to update the market on Thursday into the progress of its own investigation into the error being conducted by auditors Deloitte and law firm Freshfields.

Over the last year Tesco's big out-of-town stores have lost favour as shoppers buy more produce locally and online, while discounters Aldi and Lidl and upmarket chains Waitrose and Marks & Spencer squeeze the middle ground.

Sky also reported, without citing its sources, that Tesco had asked the investment bank Greenhill to field offers from parties interested in buying assets, including the customer data specialist Dunnhumby.

Greenhill was not immediately available for comment when contacted by Reuters.

On Friday, CEO Dave Lewis told staff in an internal e-mail seen by Reuters that he expects to be able to give a "clear and accurate indication" of the impact of the accounting mistake when the company reports its results later this week.

He also told staff that the performance in its core food business would be "one of our strongest for a very long time".

Tesco's interim results on Thursday will cover the six months to Aug. 23. - Reuters