Food
Tesco provided more information about how it accounts for relationships with suppliers on Wednesday after an accounting scandal that contributed to an annual loss of 6.4 billion pounds ($9.5 billion).
Britain’s biggest retailer announced last year it had overstated profits by 263 million pounds due to booking deals with suppliers too early, prompting a criminal investigation by Britain’s Serious Fraud Office.
As it announced the biggest loss in its 96-year-history on Wednesday, Tesco said it was increasing transparency and seeking to build “longer-term, mutually beneficial partnerships” with its suppliers as it tries to rebuild trust in the market.
It is seeking to simplify the deals it negotiates with suppliers, noting it was currently using over 20 different kinds of payment terms, including multiple offers and rebates when agreed sales volume targets are met.
It also gave more details on how it accounts for supplier deals and the impact on its balance sheet and said it had launched new guidelines for staff in this area.
UK consumer watchdog Which? demanded an investigation on Tuesday into “misleading and confusing” pricing tactics over seven years in areas such as multi-buy offers at British grocers.
Led since September by Dave Lewis, a former executive at major Tesco supplier Unilever, the retailer said it had met with over 100 suppliers to draw up new business plans to focus ranges and improve efficiency in its supply chain.
Suppliers are feeling the squeeze due to a fierce price battle between Tesco and its main rivals, Sainsbury’s, Asda and Morrison’s, with 146 food producers entering insolvency in 2014, up from 114 in 2013, according to accountants Moore Stephens.
