Steinhoff shares plunge
FALL OVER 50%: CEO QUITS AMID ACCOUNTING IRREGULARITY STORM Jooste has been replaced by business baron Christo Wiese, who is also the biggest shareholder.
Steinhoff International CEO Markus Jooste has resigned with immediate effect amid the retail giant’s admission of irregularities in its financial accounts that has sparked an investigation and a share free fall.
Jooste, who has been with Steinhoff sine 1988 and been crucial in turning it into Europe’s second-largest homeware retailer, will be replaced by 76-year-old business baron Christo Wiese.
Steinhoff’s share price fell 51.81% to R22/share at the start of yesterday’s trading session, wiping out R93 billion from its market capitalisation. Its share price in Frankfurt suffered a similar fate, crashing 57% to €1.42. Steinhoff’s share price has sunk 62% so far this year.
Steinhoff has relieved shareholders of R155 billion worth of value since Friday afternoon. The biggest shareholder is Wiese.
Ben la Grange, CEO of Steinhoff Africa Retail (Star), also resigned with immediate effect, sending the company’s share price down 16.26% during intra-day trade. Star is Steinhoff’s unbundled African subsidiary in which it owns 76.8%. La Grange was Steinhoff International’s CFO before Star’s JSE listing in September.
Wiese, Steinhoff’s chair, will temporarily run the company. Pieter Erasmus, previous Pepkor Group CEO, will join him in an executive advisory capacity.
“Wiese and the board will supplement the management team and will embark on a detailed review of all aspects of the company’s business,” Steinhoff stated.
Steinhoff’s share price collapse intensified on Tuesday after releasing a trading update on Monday that its annual financial results would be presented in an unaudited format.
The company was meant to release its annual results yesterday but will only release results “when it is in a position to do so”.
Steinhoff said its auditors “had not finalised their review of certain matters, most of which were raised by the criminal and tax investigation in Germany”.
It said new information had come to light relating to accounting irregularities, which might see the company having to restate previous financial statements.
The retailer has approached PwC to perform an independent investigation.
Steinhoff has been forced to defend itself from damaging European media reports on numerous occasions about accounting irregularities and nondisclosures relating to its acquisitions, which has sullied its reputation.
In November, Steinhoff rejected media reports that revealed that it didn’t inform investors about deals worth $1 billion (R14.2 billion at the time of writing).
Reuters reported Steinhoff didn’t inform investors about material transactions with a related company despite European laws requiring it to do so.
Denying the allegation, Jooste said at the time “all reporting requirements have been met. This is confirmed by our internal legal team and external experts.”
In August, a leading German business magazine alleged that a public prosecutor was investigating Jooste on suspicion of accounting fraud. In September, a Dutch court heard an application for an investigation into Steinhoff’s 2016 annual accounts. The application, brought by businessman Andreas Siefert, alleged that Steinhoff didn’t properly account for the joint-venture nature of Conforama.
Steinhoff denied all allegations of wrongdoing.