Steinhoff bullish on growth prospects

STEINHOFF International Holdings grew its revenue 45 percent in the first quarter, to €5.3 billion (R72.57bn), and is confident its growth momentum will be maintained.

The listed company said yesterday the growth included the newly acquired Mattress Firm and Poundland businesses, which contributed revenue of €1.3bn during the quarter under review.

Steinhoff, which has been on an acquisition spree, said that, excluding these acquisitions, group revenue increased 11 percent.

It remains to be seen whether the January acquisition of Australia’s Fantastic Group will boost Steinhoff ’s bottom line.

Chief executive Markus Jooste said: “The group performed well during the first quarter of the 2017 financial year, with growth momentum continuing in line with management expectations, as our business positioning in the discount segment of the market has continued to be beneficial to the group.”

Revenue growth in the European general merchandise segment exceeded expectations.

Steinhoff generates revenue in different currencies, but reports in the euro, with its headquarters in Frankfurt. Last month, the retail group ended merger talks with Shoprite and called off a potential marriage pertaining to their African operations.

Acquisitions Steinhoff paid $3.8bn (R49.18bn) to buy US-based Mattress Firm last year in a deal that took it across the Atlantic for the first time. It also acquired Britain’s Poundland in an $800m deal.

Under the general merchandise division in Europe, Steinhoff opened 88 stores, taking the overall total to 1 063 stores.

The group said Poundland was ahead of expectations, and it contributed £448m (R7.24bn) in revenue to the division.

“Revenue growth achieved in the European general merchandise segment exceeded our expectations, and management must be commended for strong double-digit like-for-like sales growth,” Jooste said.

The group’s total revenue was €5.3bn for the quarter, with Mattress Firm and Poundland contributing €1.3bn.

In the household goods retail segment, revenue improved by 41 percent to €3.2bn).

Retail revenue in this segment, excluding Mattress Firm and global supply chain operations, increased by 13 percent.

In Europe, the Conforama group performed well, with continued market share gains in all territories.

In the UK and Australia, revenue was maintained on a constant currency basis, notwithstanding the challenging post-Brexit environment.

In Southern Africa, like-forlike revenue growth amounted to 6 percent.

The general merchandise retail segment increased revenue 66 percent to €1.8bn. The figure included the Poundland business. Excluding the contribution of Poundland, revenue increased 17 percent.

The automotive division increased revenue 6 percent in constant currency.

On a like-for-like basis, revenue increased 4 percent despite continued weakness in the new and pre-owned vehicle markets in South Africa.

Steinhoff shares closed 1.51 percent weaker yesterday at R69.83.