Tesco PLC (USA) (NASDAQ:TESO) (LON:TSCO), posting underlying diluted earnings per share of 7.71p, a 48.2% year over year decline at current tax rates. This morning’s report was an interim report.

Tesco PLC Slumps After Profit Error, Weak Earnings

The grocery store chain also said this morning that it previously overstated its profits by £263 million. The company’s previous report was £250 million, which means the overstatement nearly wipes out all of its first half profits.

Tesco’s latest earnings report

This morning Tesco said like-for-like sales in the U.K. declined 4.6% due to strong competition within the grocery business. Also fewer untargeted promotions and price cut headwinds weighed on the company’s results. The company saw £.9 billion in Group trading profit, which is a year over year decline. Online sales in the U.K. grew 11%, while like-for-like sales growth was .8% in the company’s U.K. convenience stores.

Tesco confirmed its interim dividend of 1.16p per share and reduced capital expenditures to £2.1 billion.

Tesco overstates profits

Independent accounting firm Deloitte investigated Tesco’s profits and discovered that for the first half of this year, the company overstated them by £118 million. Last year, Tesco’s overstatement was £70 million, and the year before that, the company overstated its profits by £75 million.

According to the BBC, Tesco had been following the common practice of making deals with suppliers about promotions. However, the company had been booking returns from the promotions too early and pushing back the costs of those returns. Since the discovery has come out, eight executives have been suspended and Tesco’s chairman said he will step down from the company.

In this morning’s report, Tesco stated that there was no evidence that any fraud or personal gain had occurred as a result of the misreported profits. The Financial Conduct Authority will review Deloitte’s report.

“The issues that have come to light over recent weeks are a matter of profound regret,” said now-former Tesco Chairman Sir Richard Broadbent in a statement. “We have acted quickly to clarify the financial performance of the company. A new management team is in place to address the root causes of the mis-statement and to develop and implement the actions that will build the company’s future.”