Steinhoff takes steps against virus

Steinhoff’s revenues are growing though its businesses in Europe and Africa, but the scandal-hit retailer is taking steps to mitigate any potential effect the coronavirus might have on its performance, it says.

Steinhoff’s revenues are growing though its businesses in Europe and Africa, but the scandal-hit retailer is taking steps to mitigate any potential effect the coronavirus might have on its performance, it said on Thursday.

In an operational update for the three months ended in December, Steinhoff said many of its businesses were dependent on sourcing and supply from Asia. “While it is widely expected that the outbreak and spread of coronavirus may lead to sourcing and other challenges, it is not yet possible to determine accurately any future impact on business performance,” it said.

“However, businesses in the group are taking a number of steps to mitigate any potential effect, including alternative sourcing arrangements.”

The company, which was at the centre of SA’s largest corporate scandal, is still trying to win back market trust after its share price plunged in 2017 when Steinhoff’s then CEO, Markus Jooste, stepped down over an investigation by German authorities into accounting fraud.

On Thursday, the group reported revenue growth from continuing operations of 7% to €3.44bn (about R58bn) for the period under review, compared with €3.21bn, with growth being driven by the performances of Pepco Group in Europe and Pepkor Africa.

“The general merchandise businesses continued to expand, particularly Pepco Group, which is growing at a rapid pace, driven by further expansion of its store footprint in central Europe,” Steinhoff said in the update.

Pepco Group, a discount variety retailer with more than 2,800 stores in 14 territories across Europe, saw revenues rise 15% in the last quarter of the 2019 calendar year, compared with the last quarter of 2018.

This was driven by the ongoing expansion in Europe.

Pepkor Africa performed strongly in the period, increasing revenue (excluding Zimbabwe) by 8% to R20.9bn for the three months ended December 31. Pepkor Africa has the largest retail store footprint in Southern Africa with more than 5,400 stores operating across 11 African countries.

Steinhoff’s Mattress Firm business in the US delivered a “strong performance”, with revenues up 12% as it continues to make good progress with its turnaround strategy.

The group said it has made significant progress with its plans to simplify its portfolio during the period, with the disposal of a number of businesses either completed or in progress.