Fitch puts Tesco on "rating watch negative"
Fitch Ratings has placed Tesco's 'BBB'rating on "rating watch negative” after the supermarket said it miscalculated its first half profit guidance.
Tesco’s shares fell to its lowest price since 2003 as it launched an investigation into its accounting practices after overstating its profit forecast by £250m on 29 August.
The grocer is looking into whether it will impact on the full-year profit guidance and has suspended four executives, including its UK managing director Chris Bush, over the incident.
Tesco has also reportedly suspended its UK finance director Carl Rogberg, its food commercial director John Scouler and the head of food sourcing Matt Simister.
"Disappointment would be an understatement," said Tesco chief executive Dave Lewis.
Fitch said the revision of the guidance exacerbates negative trends in the core UK operations.
The ratings agency said following the company’s August profit warning it had noted the profitability of domestic operations, trading performance and market share remained under pressure over the summer period.
“This trend has been further accelerated as a result of the accounting errors and is evidence of the significant operational leverage in the business, particularly driven by Tesco's dominant presence in the large scale hypermarket formats,” Fitch added.
“Today's announcement also confirms risks around the group's governance.”