Tesco’s $50m over-indulgence

London: Tesco has taken delivery of a new Gulfstream 550 corporate jet, valued on the open market at more than $50 million, just days after revealing it had overstated its profits by £250 million.

The latest addition to Tesco’s fleet landed on British soil even as the struggling supermarket group pledged to put all its executive jets up for sale in a bid to rebuild investor confidence.

The new long-range aircraft - ordered early last year, as the group was cutting global operations - will raise more questions over the tenure of Philip Clarke, the former chief executive ousted in July. A person close to the company said: “If you want an indication of what has gone wrong at Tesco [it was that] we ordered another Gulfstream.”

Britain’s biggest retailer sparked a storm of shareholder fury last year when it emerged that it was operating a fleet of four executive jets despite falling sales at home and troubles abroad.

The news comes as the group attempts to recover from a bout of trouble, including three profit warnings in three months and the revelation that the Financial Conduct Authority was investigating its accounting practices.

Tesco’s new chief executive, Dave Lewis, was brought in early from Unilever to replace Clarke after the second profit warning a month ago. People inside the company said one of his first decisions was to sell the aircraft, though the group has not announced this publicly.

Tesco would not comment on the new jet, beyond saying: “All aircraft operated by Tesco are in the process of being sold.”

The retailer was this week registered as the new owner of a Gulfstream 550 on the website of the Civil Aviation Authority. Aircraft brokers said Tesco had put its old Gulfstream on the market in May and it was expected to attract a price of $30 million to $35 million.

The other aircraft in its fleet include a Hawker 800, two Cessna Citations and the new Gulfstream, which together could have a resale value of more than $60 million, according to Alireza Ittihadieh, head of the broker-dealer, Freestream Aircraft (Bermuda).

Since the financial crisis, companies have been unwilling to be seen flying corporate jets for fear of being accused of extravagance. A senior executive in the private aviation industry said: “Corporates don’t want to be seen owning aircraft in Europe.”

—Financial Times