Star goes back to its roots

STEINHOFF AFRICA: NEW NAME, PROMISE TO REGAIN TRUST

Board elected to remove Tekkie Town founder Braam van Huyssteen.

Steinhoff Africa Retail (Star) will ask shareholders for permission to change its name to Pepkor Holdings, bringing to a close a three-year journey that has ended in tears for Africa’s premier retailer and other associated brands.

“This is the same business it was eight months ago when we unbundled from Steinhoff and listed on the JSE,” says Star CEO Leon Lourens. “We serve over 400 million people a year. At the ground level we continue to trade as we have always done. But at a corporate level we have been tainted by the goings on at the holdings level. My team and I are determined to work through this and regain the trust and credibility we had.”

Despite the tumultuous period since December when Star’s majority shareholder, Steinhoff, reported accounting wrongdoing that wiped 90% off its market value, the group’s operating performance for the half year was credible.

The company, which includes Pep, Ackermans, HiFiCorp and Russells, has presented figures that allow for comparisons – a tricky process considering that the group was restructured last July ahead of the listing, 750 million more shares were issued (21.5% of issued share capital) and Tekkie Town and the Building Supply Group were acquired.

Taking into account these changes, sales grew by 10.2% to R33 billion, while operating profit increased by 9% to R3.3 billion as a result of strong growth in Ackermans, the number one brand for children’s wear in South Africa and the turnaround and stabilisation of the JD Group.

The JD Group (which includes Incredible Connection, HiFi Corp, and Bradlows) reported like-forlike sales increasing by 7.3% – despite the difficult market for durable goods. Credit sales have fallen to a more manageable 29% of furniture sales.

The speciality fashion and footwear division, which includes Tekkie Town, Dunns, John Craig, Refinery and Shoe City, also achieved decent sales growth of 17.3% overall and 10.1% on a likefor-like basis. However, Pep Africa and the building materials business suffered from poor economic growth in their respective markets. Pep Africa, which accounts for just 4% of group revenue, was affected by the stronger rand and commodity weakness in many of its markets – in particular Angola and Zimbabwe.

On a comparable basis, headline earnings per share were 12.2% higher at 52.6 cents. No dividend was declared.

The Star board had elected to remove Tekkie Town founder Braam van Huyssteen from his position as chairperson of the speciality fashion and footwear division. Ostensibly this followed after Van Huyssteen initiated litigation against the Star CEO, believing that Star had breached his employment contract and then failed to remedy it.

My team and I are determined to work through this