Steinhoff faces an exodus of skilled staff amid fears of job losses

● An employee exodus may be on the cards at retailer Steinhoff as it edges closer to bankruptcy and skilled staff look for better opportunities. But some industry analysts also warn of retrenchments among the group’s 130 000-strong global workforce.

Zwelakhe Mnguni, chief investment officer at Benguela Global Fund Managers, said an exodus of highly skilled people was likely. “If you just take all the claims . . . and look at the debt, I can’t imagine anybody who would want to stay there if there is a possibility of retrenchment,” said Mnguni.

He added that it was the highly skilled employees who would run as a lot of them had share options and “those shares are worthless and there is no prospect of recovering from that kind of situation”.

On Friday Steinhoff published a restructuring framework after a meeting with its lenders in London. The retailer said it expected to report a net loss for the first half of 2018 as it worked towards paying off its R156-billion debt. Since December, Steinhoff’s share price has lost almost 98%.

The retailer, which is in the throes of an accounting scandal, has been funding working capital by selling off assets. Recently, Steinhoff sold European discount furniture retailer POCO for about R8-billion to its former business partner, Andreas Seifert.

But while the Steinhoff board has tried to reassure employees that the firm will preserve the jobs of the 130 000 people who are employed across the group, a Steinhoff spokesperson said this week: “During a difficult and uncertain time like we have and are going through, it is naturally more difficult” to convince staff that their jobs are secure.

“The loyal executives that have stayed . . . are doing their best to resolve the past issues while also dealing with the current challenges,” the spokesperson added.

Since December, Steinhoff has had eight resignations at head office level.

“In addition, some staff in head office group services such as company secretarial, tax and treasury departments, were moved to the underlying operations where the skills are needed closer to the operations,” the spokesperson said.

Currently, Steinhoff employs 80 people at its head office compared to 125 employees three years ago.

On whether Steinhoff would consider retrenchments, the spokesperson said: “Not at this stage.”

But Steinhoff’s dependence on the sale of some its assets to sustain itself has become an area of contention among investors, with many calling for the total dismantling of the retail giant.

An analyst, who did not want to be named, said the €1-billion (about R15-billion) that its African operation, Steinhoff Africa Retail (STAR), owes it “can count as a significant lifeline and that might sway in favour of them surviving and keeping the Steinhoff name. If Steinhoff doesn’t continue as a going concern it will be broken up into its parts and people will buy the pieces and there are some profitable businesses inside of that.”

Recently, Christo Wiese, the former chairman of Steinhoff and its largest shareholder, called for a restructuring of the group, in terms of which investors would be able to get some of the group’s more valuable assets, including the prized Pepkor, owner of Pep Africa stores.

Wiese owned a significant shareholding in Pepkor along with Brait before it was sold to Steinhoff in 2015 for R62.8-billion. Wiese was paid in Steinhoff shares.

STAR, which owns Pep and Ackermans and in which Steinhoff has a 71% stake, has been valued at à4.2-billion, based on a consensus among Absa, Deutsche Bank and Investec. Steinhoff has valued STAR at à3-billion.

“In Europe you have established businesses with credible and established brands, which makes it difficult to imagine these businesses [closing] down. But when it comes to head office jobs you are probably going to see a lot of resignations there,” the analyst said.

Steinhoff share price rose 12.5% to R1.80 on Friday. Its results will be released in June.

I can’t imagine anybody who would want to stay there

Zwelakhe Mnguni Benguela Global Fund Managers