Gigantic U.K. retailer Tesco faces “operational paralysis” over the busy Christmas shopping season as a forensic investigation into how the company overstated its profits by £250 million ($316 million) would require executives to hand over their laptops and be interrogated.
In addition, 10 of the company’s most senior staff have been suspended, have been asked to leave, or have stepped down from the company.
In a note, Cantor Fitzgerald analyst Mike Dennis said:
The forensic investigation could, in our view, create operational paralysis for Tesco ahead of the very busy Christmas build up. We believe the investigation requires all commercial department personnel to hand over communication systems (laptops) to be interrogated and all supplier meetings to be postponed then, we believe Tesco’s ability to operate could be compromised at a critical period ahead of the start of the build up to Christmas trading.
Tesco is the U.K.’s biggest supermarket by a long way, and the world’s second-largest retailer. Its share price is down 1.91 percent on the latest news today, and has been slashed by more than 50 percent in the past year.
There has already been an implosion within Tesco’s management. Today, three more execs were suspended, according to the Times: Dan Jago, head of beers, wines, and spirits; Sean McCurley, a category director for convenience foods; and William Linnane, who oversees impulse purchases.
Seven senior directors have previously been kicked out of the company. The most recent pair left yesterday: company secretary Jonathan Lloyd and chairman of the audit committee Ken Hanna. Before them, commercial director Kevin Grace left, preceded by Chris Bush, managing director for the U.K.; Carl Rogberg, who worked with him in Tesco’s business in Thailand and is UK finance director; John Scouler, food commercial director; and Matt Simister, who is responsible for sourcing.
Company chairman Sir Richard Broadbent is regarded as another exec who may be required to leave the company. One of Tesco’s directors is searching for a replacement, according to Sky.
See also: Tesco’s Dodgy Accounting Practices