TESCO Accounting Scandal: Write a brief report and crisis press release sample (450 words)

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Background:

In 2014, Britain’s biggest retailer TESCO faces a crisis situation two weeks after announcing that it overstated its first-half profit expectations by some £250-million. TESCO reported on September 22, 2014 that its August 29 profit warning should have forecasted trading profit totalling £850-million, rather than the £1.1-billion that the company actually reported – an inflation of nearly 25%.

Scenario:

Imagine you are the PR practitioner in TESCO and you have to write a press release to announce this serious issue. However, before sending the press release to all the media, you have to write a letter to the CEO to reported on the issue and show him the press release sample. Therefore, this letter to CEO should contain the following information:

  • Brief of situation (150 words):

    First, introduce the main issue and how this problem was uncovered. (The problem was uncovered by a whistleblower from within Sainsbury, who sent an email to the in-house counsel, informing about the wrong figures.)

    Next, tell CEO you will send the press release to all the financial media, such as The Financial Times, because the TESCO scandal will mainly influence investors in the stock market, and those financial media are the main media investors read.

  • A Press Release Sample (300 words)
    (please follow the structure bellow)

Title:

(Ex. Apologize for overstating first-half results by £250m)

Content:

  • State the issue:

    Admitted that TESCO have uncover a serious issue, which is “the first-half profits were overstated by an estimated £250m.”

  • Possible cause of the issue

    Explain that the issue is “principally due to the accelerated recognition of commercial income and delayed accrual of costs, as well as timing differences. The problems were focused on the UK food business.”

  • Investigation

    TESCO take actions immediately, they asked Deloitte to undertake a comprehensive investigation of their accounts. For example, you can write: “Work is ongoing to establish the extent of these issues and what impact they will have on the full year.”

  • CEO’s Expectation

    Declare that four undisclosed senior directors who involved in this have been suspended while the investigation is undergoing. And emphasize on CEO’s expectation: “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. (Please paraphrase it)”

  • Note that you will release additional information once you have more facts.

    Materials:

    Tesco reveals it overstated first-half results by £250m
    https://www.ft.com/content/67fb8db4-421e-11e4-9818…

    Tesco suspends senior staff and starts investigation into overstated profits
    https://www.theguardian.com/business/2014/sep/22/t…

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