Steinhoff encouraged by recovery

The retail group says its main trading subsidiaries are poised to gain market share due to their resilient and defensive discount offerings.

Steinhoff International says it felt the full impact of Covid-19 in the third quarter of its financial year, with many of its markets entering lockdown for a large part of the period before reopening progressively through late May and June. However, the retail group says the value offering of many of its brands and its geographical spread played in its favour over the period.

In a trading update for the nine months to end-June, Steinhoff said it was encouraged by the performance of its retail businesses since lockdown restrictions were lifted. While the sustainability of demand was uncertain, it said its main trading subsidiaries were positioned to gain market share in the post-Covid-19 environment due to their more resilient and defensive discount and value offerings.

For the period, total group revenue fell 6% to €6.76 billion due to a decline at biggest contributor Pepkor Africa, which reported a 10% fall in sales due to the tougher lockdown restrictions in South Africa. European subsidiary Pepco Group grew revenue by 2%, while Conforama reported an 18% decline.

Meanwhile, the retailer said it had made progress with its ongoing restructuring, finalising the disposals of Conforama France and Conforama Switzerland and announcing a proposal to settle outstanding litigation facing the group.

Last month, Steinhoff offered a R16.5 billion settlement with those who are trying to sue for the accounting fraud that resulted in the precipitous decline in its share price in December 2017. The settlement would include some shareholders who acquired shares in the market and also contractual claims from businesses that were sold to Steinhoff in return for shares in the retailer.

Although there is no certainty yet that we will be able to conclude this proposed litigation settlement, in our view these terms are firmly in the best interests of all stakeholders,” Steinhoff said.
Following the easing of lockdown restrictions, Steinhoff said revenues were trending back to, and in some cases above, pre-Covid-19 levels. Its cash position at the end of June was better than expected at the beginning of the pandemic.

The full impact of Covid-19 on the performance of the Group for the 2020 financial year remains uncertain,” the retailer said. “It is clear, however, that the virus outbreak and resulting restrictions have had a negative impact on overall turnover and the underlying business performance during this period.”

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