Tekkie Town secrets unveiled
• A culture clash between the retailer’s loyalists and new owner Star behind Monday walkout
A leaked Tekkie Town letter to the CEO of Steinhoff Africa Retail (Star) has revealed a clash of cultures. In a tumultuous few days at Star’s Speciality division, its CEO, Bernard Mostert, has resigned and the company has been served notice of eviction at its national distribution centre. These developments sent Star’s share price more than 4% lower on Tuesday.
A leaked Tekkie Town letter to the CEO of Steinhoff Africa Retail (Star) has revealed a clash of cultures.
In a tumultuous few days at Star’s Speciality division, its CEO, Bernard Mostert, has resigned and the company has been served notice of eviction at its national distribution centre.
These developments sent Star’s share price more than 4% lower on Tuesday.
Business Day has seen a copy of a message sent by the chief information officer to Star CEO Leon Lourens.
Many of the problems that came to a head on Monday evening — when Mostert led a mass walkout at the company — stem from the deteriorating relationship between Tekkie Town founder Braam van Huyssteen and the executive of Star led by Lourens.
This was aggravated by Star’s failure to recognise the terms of a bonus scheme agreed to between then Steinhoff CEO Markus Jooste and Van Huyssteen at the time Steinhoff acquired Tekkie Town in 2016.
The message — written by Tekkie Town’s erstwhile chief information officer, Willem Wait, who resigned in protest on Monday evening in solidarity with Mostert and chief operating officer Dawie van Niekerk — was in response to an overture by Lourens to get him to return to work to keep the business running.
According to Wait, Lourens — desperate to stem the effect of the walkout — indicated he could “name his price”.
In a politely worded message sent on Wednesday morning declining the offer, Wait said that being part of the Tekkie Town culture was more important to him than continuing as a hired gun. The message gives clues to the reasons so many individuals decided to follow Mostert out the door.
Employees clearly identify with the familial culture established by Van Huyssteen.
Following the mass resignations on Monday evening, Van Huyssteen told Business Day that he would undertake to financially assist every one of his previous employees until he has personally run out of money, and views the employees of the company he founded as part of his extended family.
Having spent 11 years at Tekkie Town, Wait writes: “It was over these years that I’ve learned that Tekkie Town is not the shoes, or the branches, nor the building, but the individuals that worked, stressed and sacrificed alongside me in order to fulfil a purposeful life and provide for their families.”
Wait said the culture of the organisation that he so strongly identified with had now left with the people who resigned in solidarity with Mostert and Van Huyssteen over the course of Monday and Tuesday — now amounting to more than 100 people.
“It is those individuals that … through their input, willingness and effort, (formed) a culture that can only exist when they come, stay and stand together. It is that culture I belong to and it is that … I want to stay part of till my time here is done.…” If Wait’s feelings resonate with the rest of the employees who have left the company, Star might soon find a formidable competitor if Van Huyssteen does indeed decide to launch a competitor to rival the business he founded and ultimately sold to Steinhoff in 2016.
A full version of the message is on the Business Live website.
WAIT SAID THE CULTURE OF THE ORGANISATION THAT HE SO STRONGLY IDENTIFIED WITH HAD NOW LEFT WITH THE PEOPLE WHO RESIGNED
Steinhoff Africa Retail (Star) has identified 10 “strategic drivers”, which it says are critical elements that help determine its success and plans for the future. “An experienced management team and loyal and committed employees” is the 10th of these drivers.
Tekkie Town executives and employees may beg to differ.
Of course the reality is that Tekkie Town does not feature large in Star’s life. It is part of a division that contributed just 4% to group revenue in 2017. This might make it difficult to understand the 3%-plus fall in the Star share price on the news of the walkout of key “not-so-loyal” Tekkie Town executives.
The problem for Star executives and shareholders is that much as they might wish, it will take a lot more than a change of name to free it from association with Steinhoff. At the heart of the Tekkie Town dispute is an earnout agreement its executives say was made at the time of the sale to Steinhoff. No doubt the sense of injury among the many executives who built up the business is heightened by the fact that they are now sitting with almost useless Steinhoff shares.
From an investor perspective, the earn-out might look a little too much like the R500m needed to cover the executives’ incentive scheme. It won’t involve as much money, but it is another guarantee that only insiders knew about. The drama reminds everybody that Star could be littered with these sorts of expensive guarantees.
As for Braam van Huyssteen’s ability to kick Tekkie Town out of its premises in George, why was there no disclosure of a related-party agreement that generated R12m income a year for Van Huyssteen? Perhaps the details are also buried somewhere in Star’s public statements.
Until the board can control these sorts of disturbing developments, the share price will never reach the levels justified on operational grounds.
Old Mutual’s “homecoming” is something of a misnomer. The 173year-old insurance group never really left SA, which, despite a two-decade global venture, remains its most substantive contributor to earnings.
For the 6-million policyholders in SA (half of Old Mutual’s customer base), the location of its primary listing is immaterial, as is the fact that it no longer owns a US-based asset manager or a British wealth manager.
Perhaps unsurprisingly then, trade in Old Mutual Ltd’s shares has been muted and rangebound since it moved its primary listing to the JSE on Tuesday. Investors who already own the shares are holding them, while others are waiting to interrogate management and to get to grips with an emerging market stock.
But despite its more intuitive shareholder base and 12-million customers, Old Mutual has its work cut out.
Economic conditions in its most important market are dire, as consumers draw on their savings or cancel policies to free up cash flow.
A spending culture, rather than saving, further hampers new wealth creation, which is reflected in a life insurance index 12% weaker this year after hitting a Ramaphoria high.
Old Mutual shareholders — expecting a rerating of the stock now free of the “conglomerate discount” — may yet wait.