Tesco warns profits overstated by £250m as it uncovers 'serious issue'

Mr Lewis is already battling against tough trading conditions in the UK and abroad, with Tesco sales falling at the fastest rate for a decade. He was brought into Tesco a month early than planned after a slump in trading prompted another profit warning in August.

The company said the review from Deloitte will be "independent and comprehensive"

Mr Lewis added: "We have uncovered a serious issue and have responded accordingly. The chairman and I have acted quickly to establish a comprehensive independent investigation.

The board, my colleagues, our customers and I expect Tesco to operate with integrity and transparency and we will take decisive action as the results of the investigation become clear."

Nick Bubb, retail analyst, said: "This will go down like a lead-balloon in the City."

Clive Black at Shore Capital said he was "flabbergasted".

He added: "Such an announcement is not the stuff of a well operated FTSE-100 organisation. Clearly there can be no suggestion of impropriety on behalf of the new CEO to our minds, who has been in the job less than a month.

"However, this development may raise, indeed must raise, much more fundamental questions over the chairman's position and the nature, composition and extent of the board, which to our minds has been lop-sided between executives and NEDs for far too long; such matters, of course, are for shareholders to decide."

"These are serious times for Tesco and its shareholders. We are flabbergasted by this development."

more