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Tesco profits fall 92pc as sales tumble

Tesco has announced a 91.9pc plunge in pre-tax profits to £112m (€141m) for the first half of the year.

Britain's biggest supermarket chain also revealed that an investigation into overstated profit expectations had concluded it had an impact of £263m (€332m).

The group's chairman Sir Richard Broadbent said he was preparing to step down, adding: "The issues that have come to light are a matter of profound regret."

UK like-for-like sales were down 4.6pc for the six months to August amid "strong competition across the market".

Tesco has been battered by a supermarket price war amid the threat from discounters Aldi and Lidl.

Chief executive Dave Lewis said: "We know that we have got a lot of work to do. We know what it is we need to do to turn the business around."

He said a full review of the business was under way.

Mr Dave Lewis has been tasked with arresting the decline, with one analyst urging him to go on the attack with a £3bn (€3.8m) strategy to turn around its fortunes over the next few years.

HSBC analyst David McCarthy said Tesco needed to invest in price cuts of 5-6pc, more store staff and food quality. But he warned the turnaround could take more than five years.

Mr McCarthy concluded that Tesco could help pay for this with cost savings including a reduction in head office staff and by giving up a chunk of its profit margins - as well as by ditching its fleet of private jets.

Meanwhile, the accounting probe is expected to reveal how the company treated rebates paid by suppliers and whether they were reported in the right time period. The UK's Financial Conduct Authority is also investigating.