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* Alan Stewart released by M&S two months early
* Move follows appeal by Tesco CEO to M&S CEO
* Stewart expected to start work on interim results
* Industry data shows Tesco's UK sales still sliding
* Shares fall 4 pct after 12 pct slump on Monday (Adds investor comment)
By James Davey
LONDON, Sept 23 (Reuters) - Tesco rushed its new chieffinancial officer into place on Tuesday, trying to shore up aleadership team badly damaged by the accounting mistake revealedon Monday that knocked millions off the company's profits andbillions from its share price.
Britain's biggest retailer hired Alan Stewart from Marks &Spencer early in the summer but he was not due to startuntil December. Tesco's - also new - chief executive Dave Lewissaid on Tuesday that M&S boss Marc Bolland had now agreed torelease Stewart early.
The 54-year-old must now set about restoring the credibilityof Tesco's finances after Monday's revelation that thefirm's first half profit forecast had been overstated by 250million pounds ($409 million).
That news - effectively Tesco's third profit warning in twomonths - along with the suspension of four senior executives andthe company's decision to call in investigators wiped 2 billionpounds off Tesco's stock market value.
Its shares added another 4 percent to Monday's 12 percentdrop after industry sales data on Tuesday showed no signs ofrecovery in its key UK market.
Stewart is expected to immediately start preparing Tesco'sinterim results, the date of which was pushed back on Mondayfrom Oct. 1 to Oct. 23. Analysts are bracing for furtherwrite-offs and negative news on that date.
"Shareholders should certainly brace themselves for a lot ofkitchen sinking," said independent retail analyst Nick Bubb -referring to the practice of companies that are in trouble ofpublishing any further bad news to investors in one go.
Bernstein Research analyst Bruno Monteyne said new adviserDeloitte and legal adviser Freshfields, brought in by Lewis toinvestigate the profit overstatement, could well find otherissues or the same issues in other countries.
"We expect that this isn't the end of the bad news," hesaid.
Investors are also waiting to see how much it will costLewis to fix the company's struggling UK operations, which arelosing market share to fast growing German discounters Aldi and Lidl in a grocery market that isgrowing at its slowest pace for over 20 years..
Simon Holman, a partner and investment manager at Tescoshareholder Castlefield, said he was minded to give Lewis achance to implement a new strategy.
"Having delayed the interim results announcement, I'd hopethat these accounting issues can be finalised by then to showdecisive action," he said.
BIG TASK
Industry data published on Tuesday showed the magnitude ofthe task Lewis faces.
Kantar Worldpanel said Tesco's sales in the 12 weeks toSept. 14 fell 4.5 percent year-on-year, taking its share of theUK grocery market down to 28.8 percent from 30.2 percent thistime last year.
Tesco remains the worst performer of Britain's so called"big four" grocers, which also includes Wal-Mart's Asda,Sainsbury's and Morrisons
Analysts at Societe Generale forecast a further drop inmarket share, saying there was a danger now that the accountingissues could delay the setting out of a new strategy from Lewis.
"We think top management and the company as a whole couldstruggle to wholly focus on day to day business in the comingmonths and hence expect further deterioration in like-for-like(sales) and market share trends," they said in a note.
Tesco has effectively been without a chief financial officersince Laurie McIlwee quit the role in April. Though McIlwee'sofficial leaving date was Oct. 3 he had been working onlysporadically since handing in his resignation.
Stewart quit M&S on July 10 to join Tesco but had since beenon a period of so called "gardening leave", his contractualnotice period which meant he could not join Tesco until Dec. 1.
A spokesman for M&S said on Tuesday Stewart had beenreleased early after "a request from Dave to Marc. As a businessthat operates with integrity we felt it was the right thing todo." Tesco did not pay any compensation for Stewart's earlyrelease, the spokesman added.
Stewart is vastly experienced and has a reputation for costcutting. He had held the CFO role at M&S since October 2010 andbefore that was finance director of WH Smith. He hasalso held executive roles at HSBC and Thomas Cook.
Separately on Tuesday it emerged that executives at Tesco'sHomeplus business in South Korea, its largest overseas unit, arebeing investigated over the possible leaking of customers'personal information.(1 US dollar = 0.6109 British pound) (Additional reporting by Simon Jessop; Editing by SophieWalker)
