Star falls despite solid update

Steinhoff Africa Retail (Star), which listed in September 2017, slumped 7.24% on Friday to close at R20.13 following the release of a reasonably solid trading update for the three months ended December 2017.

Steinhoff Africa Retail (Star), which listed in September 2017, slumped 7.24% on Friday to close at R20.13 following the release of a reasonably solid trading update for the three months ended December 2017.

Analysts said the result did not justify the sharp sell-off and the share price weakness had more to do with the collapse in global market sentiment. The group, which has 4,950 homeware and consumer goods stores across Southern Africa, was established as an African standalone subsidiary of Steinhoff International in 2017.

The dramatic events that unfolded at the parent company since it announced “accounting irregularities” in early December 2017 included the resignation of former Star CEO Ben la Grange. La Grange was chief financial officer at Steinhoff. Leon Lourens, previously chief operating officer at Star, was appointed CEO. During the December quarter Star’s revenue increased 15.5% to R18.4bn. Pep and Ackermans, two of the biggest divisions in the group, reported a combined 6.3% rise in revenue. On a like-for-like basis this was a much more pedestrian 1.9% increase, with the reasonably strong increase in sales volumes not being matched in rand terms because of lower sale prices.

“Resilient back-to-school campaigns resulted in like-forlike sales growth of 4.9% during January 2018,” the company said. The furniture, consumer electronics and appliances businesses — which include Russells, Bradlows and Poco — reported revenue growth of 12.1% and like-for-like sales growth of 7.4% in the quarter.

Revenue in the building materials and DIY business was down 5.1% and like-for-like sales down 3.4%.

Speciality fashion and footwear reported a 19.9% rise in revenue, with like-for-like sales growth of 12.5%.