Em­bat­tled Stein­hoff con­tin­ues its free fall

SA sub­sidiary launches bid to forge its own iden­tity

The Sunday Independent - - Business Report - Sandile Mchunu

STEIN­HOFF In­ter­na­tional con­tin­ued its free fall this week, shed­ding more than 23 per­cent in five days as its lo­cal sub­sidiary, Stein­hoff Africa Re­tail (STAR), strug­gled to find its feet af­ter an­nounc­ing it was re­vert­ing its name back to Pep­kor in a bid to forge a sep­a­rate iden­tity.

Stein­hoff slumped to a low of R1.13 a share on Thurs­day, down 36 cents com­pared to R1.49 on Mon­day as the in­ter­na­tional group’s long-awaited re­lease of its au­dited re­sults con­tin­ued.

STAR also ex­tended its losses de­spite say­ing it would seek ap­proval from its share­hold­ers to change its name back to Pep­kor Hold­ings.

Stein­hoff has a 71.01 per­cent stake in STAR.

On Tues­day STAR re­ported a 9 per­cent in­crease in op­er­at­ing prof­its to R3.3 bil­lion for the six months to end March, as a re­sult of strong growth in Ack­er­mans, re­garded as the num­ber one brand for chil­dren’s wear in South Africa, and the turn­around and sta­bil­i­sa­tion of the JD Group.

The spe­cial­ity fash­ion and footwear divi­sion, which in­cludes Tekkie Town, Dunns, John Craig, Re­fin­ery and Shoe City achieved sales growth of 17.3 per­cent over­all and 10.1 per­cent on a like-for-like ba­sis.

Head­line earn­ings per share (heps) in­creased 12.2 per­cent to 52.6 cents.

STAR said it would not pay a half-year div­i­dend and an­nounced charges re­lated to its scan­dal-hit par­ent com­pany.

STAR is the owner of iconic South African re­tail brands such as Pep, Ack­er­mans and HiFi Cor­po­ra­tion and has more than 5 100 stores in 12 African coun­tries.

Stein­hoff, how­ever, is still hold­ing on to its big­gest ac­qui­si­tions, Con­forama in France, Mattress Firm in the US and Pound­land in Britain.

Ron Klipin, a se­nior an­a­lyst at Cratos Cap­i­tal, said it would have made more sense if Stein­hoff had sold or re­duced its stakes in th­ese com­pa­nies to raise more liq­uid­ity.

Klipin said the group re­mained very com­plex be­cause of a lot of things hap­pen­ing be­hind closed doors. “It is dif­fi­cult to point out the rea­son for the de­cline but one of the rea­sons could that for­mer Tekkie Town chair­per­son Braam van Huyssteen is su­ing both Stein­hoff and STAR,” Klipin said.

“Again, it is dif­fi­cult to un­der­stand why Van Huyssteen will in­clude STAR be­cause he en­tered the deal with Stein­hoff.”

Van Huyssteen re­signed from his role as chair­per­son of Stein­hoff Africa Re­tail’s (Star’s) prop­erty divi­sion with im­me­di­ate ef­fect last week.

How­ever, he will re­main chair­per­son of the Spe­cial­ity Fash­ion and Footwear divi­sion un­der which the busi­ness he founded and sold to Stein­hoff still re­mains. But his res­ig­na­tion means he will no longer be a mem­ber of Star’s ex­ec­u­tive com­mit­tee.

Stein­hoff ad­mit­ted to fi­nan­cial ir­reg­u­lar­i­ties in De­cem­ber lead­ing to the abrupt res­ig­na­tion of for­mer chief ex­ec­u­tive Markus Jooste, who has been sum­moned to ap­pear be­fore Par­lia­ment over the scan­dal.

The trou­bled re­tailer has since tried to re­as­sure in­vestors to no avail in the last seven months that it would be in a po­si­tion to do so once PwC had com­pleted its in­ves­ti­ga­tion.

In the last seven months the share price has dropped about 98 per­cent.

In­dus­try an­a­lysts have pointed to the lack of pub­lish­ing the au­dited re­sults as one of the rea­sons that the com­pany finds it­self in more trou­ble.

Stein­hoff su­per­vi­sory board has re­ported that the com­pany was faced with se­ri­ous liq­uid­ity chal­lenges, in­clud­ing a huge 10.4bn (R154.02bn) debt, with an amount of 8.7bn at­trib­ut­able to Europe, and 1.4bn to South Africa and 0.25bn to its US op­er­a­tions be­fore meet­ing its lenders in Lon­don last month.

The su­per­vi­sory board said the group ex­pected the unau­dited first half 2018 re­sults to be re­leased on June 29, which would in­clude six months 2018 in­come state­ments and six months 2017 re­stated in­come state­ment as well as the bal­ance sheet and cash flow state­ments, with 2017 half-year re­sults re­stated.

“The group aims to re­lease full year au­dited re­sults for 2017 at the end of De­cem­ber 2018 and full year au­dited re­sults for 2018 by the end Jan­uary 2019,” it said.

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