Steinhoff’s Zim plans hit by scandal

Source: Steinhoff’s Zim plans hit by scandal | Financial Gazette (News)

TROUBLED Steinhoff International’s expansion plans in Zimbabwe’s clothing retail space have been torpedoed by the giant company’s crisis.

Steinhoff, through its African unit, Steinhoff Africa Retail (STAR), owner of the PEP Stores chain, operates 40 stores in Zimbabwe, trading under the Powersales brand. STAR, which was listed on the Johannesburg Stock Exchange (JSE) earlier this year, had planned to add more stores in Zimbabwe.
With brands including PEP Stores, Ackermans, Russells, Bradlows, Incredible Connections and HiFi Corp, STAR is the biggest non-food retailer on the continent, with R52 billion revenue in 2016, more than double its closest rivals, Edcon and Foschini.

The global retail giant is reeling from a recently exposed accounting scandal, relating to the viability of about 6 billion euros ($7 billion) worth of assets on the balance sheet of its European operations. Steinhoff’s earnings statements for at least 2016 and 2017 will have to be restated.
The company’s stock crashed by 80 percent in two days after the company reported accounting irregularities that stretch back to 2016, wiping 12 billion euros off Steinhoff’s value.
The fallout has claimed the scalps of billionaire chairman Christo Wiese and chief executive officer Markus Jooste.

Steinhoff is now actively engaging its creditors, meeting with bankers in London on Tuesday.
In the aftermath of the crisis, STAR is refinancing $1,3 billion loans with its parent company and has aborted its bid to take control of food retailer Shoprite Holdings, in which Wiese is a major shareholder.

Steinhoff took control of Powersales after its March 2015 acquisition of Pepkor, which owns a range of major South African retail brands, including PEP Stores.

Although it could not be immediately ascertained when Pepkor had itself acquired Powersales, the company listed the 40 year old Zimbabwe retailer among its assets in 2012. At the time Powersales had 153 stores, generating about $15 million in annual sales. Currently, Powersales has about 50 stores.
Steinhoff, a Dutch-registered, South African firm listed in Frankfurt and Johannesburg, was coveted by investors seeking to balance exposure between developing and emerging markets. The company repaid them handsomely, trebling it share price between early 2012 and end 2016.

The company expanded its presence in the US and European markets from its South African base.
Apart from Powersales, Steinhoff has previously invested in Zimbabwe’s furniture market, through Simba Mangwende’s Tedco, in the mid-2000s.