Tesco looks to the future

In fact, the numbers were so diabolical that new chief executive Dave Lewis, during his maiden results newswire call with journalists, didn’t bother mentioning the dire performance, or even attempt to explain the 47 per cent slide in underlying pre-tax profit and 4.4 per cent fall in like-for-like sales. Instead, he focused on how he would lead a massive turnaround at the UK's biggest food retailer and answered questions about the accounting errors.

These are now under investigation by the City watchdog, the Financial Conduct Authority, after accounting firm Deloitte concluded that commercial income had been overstated by £263m. Of that, £118m related to the first-half trading profit, with the balance relating to prior years and treated as a one-off item in the income statement. Mr Lewis would not speculate further on the matter, but insisted that no one had gained financially as a consequence and he was keen to draw a line under the issue.

"Whatever has happened in the past, my focus is on the future. This is still a good business and I am optimistic, but I am not naive. We know what we need to do and have a full business review under way." But if investors were hoping for details of the plan, they would have been left disappointed. Mr Lewis, who is just seven weeks into the job, said he would work to make the UK business more competitive, strengthen the balance sheet and rebuild trust with consumers, but would not divulge any details. He warned investors should not expect a point in time where he would "stand up and declare a strategy", adding that he didn't want to give competitors an insight into Tesco's plans.

"You will see my strategy unfold, it will be dynamic and progressive," he said. However, he acknowledged the balance sheet was over-leveraged. Indeed, many analysts speculate the need for a rights issue or a massive asset sell-off, such as its Asian businesses. HSBC expects pre-tax profit of £1.6bn for the full-year, down from £2.2bn last year.