Steinhoff ‘not Christo Wiese’s parking place for assets’
Steinhoff CEO Markus Jooste is a hard man to pin down – not surprising given the company now trades out of 32 countries. Business Day caught up with him after this week’s listing of Steinhoff Africa Retail (Star). This is an extract from that interview.
A lot of people believe Steinhoff’s machinations of the past two years are geared towards what Christo Wiese wants. What would you say?
Firstly, I feel quite insulted because I would have thought after 29 years driving the ship myself that that’s not a label I would have picked up when I’m in my fifties … maybe when I was in my twenties. I met Christo in January 1982, when I was 21. I was doing my articles and we were his private company’s auditors. After I joined Claus Daun and we started with our journey, we had a 25-year gap…
[Later] I was personally, after Jannie Mouton, the biggest shareholder in PSG for many years and Christo had a big shareholding in KWV and PSG made a bid for KWV in the mid2000s …. the bid failed and after that, Christo sold all his KWV shares to PSG and got PSG shares and came onto the PSG board, and [we] met again.
At some stage [in about 2011] we invited Christo as a nonexecutive director of Steinhoff when we started to move into retail — we wanted to strengthen the board from manufacturers to include retailers… then Christo and I both sold all our PSG shares to Steinhoff, and we both got Steinhoff shares and that’s how Christo got into Steinhoff. So it was by default, if you wish.
And then we started working more closely together, he became very much a sort of mentor for me. At that stage, he was a minority shareholder in Pep. Christo said to us, Pep is a great retail business, it’s underdeveloped overseas and they don’t have access to capital… he said you guys with your backing, we can take this from 0 to 10,000 [stores] … and that’s how the idea came to look at that.
And the Pep decision had the support of the whole board … so, it had nothing to do with these gossipmongers that it’s Christo’s retirement package and I’m now looking after his children.
I have the highest respect in the world for the guy, but I’ll tell you categorically one thing: Christo has never ever asked me to do anything to favour or to help him, whatsoever.
In February when we decided that a 100% bid for Shoprite is not what Steinhoff would like to do, he took it, he was not upset.
Steinhoff is not a parking place of Christo’s assets. That’s totally unfounded and unfair.
People now have a quandary: buy Steinhoff or rather buy Star, which has the African growth story?
You must remember we are an international company, listed in Frankfurt. We had a lot of investors in Steinhoff, but they were really investing because of our emerging market exposure. So, now we’ve given those people the opportunity that you can go directly.
Our foreign investors who do not understand the African business are now much more comfortable because they can see the reference of value of what Steinhoff International is, and they can look at the businesses that they know well. The Germans know where the German retail shops are, Americans know Mattress Firm … you start talking about 5,000 shops in Africa and Nigeria and Angola and you just see the shutter goes down.
It’s two totally different investor bases. So, it’s properly valued.
Investors find Steinhoff impossible to analyse from one year to the next, given its frenzied deal-making.
I can understand that feeling, but you must always take the facts into account and forget the noise, né? It is now a big business and it’s in lots of countries, so, of course, it will be complicated. I had this criticism 10 years ago, and then it goes away, and then we buy something, and it comes back, and to be honest I’m not perturbed about it at all. If I speak to the SA Breweries guys they had it their whole life.
Now, I understand the concern of people who say but that Jooste living there in Stellenbosch, how does he know how to sell beds in America and Toblerone chocolates and Marmite in Poundland? But our job was to raise the capital and to structure it correctly. So, it’s all commercial and strategic.
With real due respect – I mean this – everyone’s entitled to their opinion, I like to argue with anyone because you learn – but take the last results presentation, then look category by category – now you must really not have to go to Harvard to understand the figures. They say turnover was X, if you take out Poundland, then growth would have been X, etc – so if you spend an hour, quite frankly, it’s spelled out line for line. So, a lot of that criticism is off-the-cuff stuff. Go to the detail, that’s why we take the trouble.
So, you’re saying that Steinhoff’s accounts give investors all the detail?
We’re one of the companies with the highest liquidity in our shares, but what really trades? Less than 10% of the stock. It’s all these gamblers. The company has 12,000 stores, 130,000 people that work there and €20bn turnover. Start there.
If we went to America and opened a Poco or Conforama shop, then I would have said the concerns are valid. But you go and buy an established business, with local management, maybe it takes a year or two longer to come right, but okay, so what? We’re long-term investors.
My opinion is that the people that don’t like what we do are the people with short-term goals. If you want to win the quarterly competition of who did the best, stay away from Steinhoff. It’s not for you.