Steinhoff companies turn the corner

JOHANNESBURG - Struggling global retailer Steinhoff’ International said yesterday that it was on the recovery path after consolidated net sales from continuing operations in the nine months to end-June rose 4percent to 10.1bn (R171.76bn), with strong contributions from its Pepkor Europe and Pepkor Africa, whose chains include Pep, Ackermans and Incredible Connection.

It said that it was encouraged by the performance of its units that were still in a turnaround phase with Mattress Firm grossing 1908million.

It said Conforama rose its turnover to 2552m and Greenlit Brands to 969m to confirm their market positions.

Steinhoff, which will hold its annual general meeting in Amsterdam today, said a mixed strategy of offloading non-core assets and securing operational funding in the majority of viable companies enabled it to capitalise on those that it has control over, which were beginning to turn the corner.

“We must provide our strongest performing businesses with the opportunity to perform to their full potential and ensure that Steinhoff’s shareholding is not a hindrance to their growth. As part of our debt reduction strategy all options will be considered. Therefore, as we continue with our restructuring, we will keep the future ownership of these businesses under review,” the group said.

Herenya Capital Advisors founder Petri Redelinghuys said while Steinhoff was on the right track, there was nothing that stood out so far.

“The share price increase is very low, it was just 4cents the whole day, a 20c or 30c increase would have been a significant percentage increase. This just shows that the market is taking it all in its stride,” he said.

Redelinghuys said the management of credit agreements, though positive, still spelt a long journey for the retailer’s turnaround, pointing out that it really needed to dispose of the non-core and under-performing assets.

Steinhoff said its current debt stood at 9.09bn, but warned that the number of lawsuits against it continued to pose a challenge.

“Our strategic direction is clear: we will focus on rectifying, restructuring and rebuilding our operations; stabilising the group, realising value where appropriate and reducing our debt levels; protecting and enhancing value

for all stakeholders through long-term growth in the underlying operations while exercising tight control of capital and expenses,” the group said.

Steinhoff shares rose2.52percent to reach R1.22 on the JSE yesterday.

BUSINESS REPORT