Steinhoff remains on track for a good performance in Europe
INTERNATIONAL – Steinhoff International’s European household goods segment remains on track to deliver good operating profit growth for the 12 months to end September.
The group, which recently acquired the UK’s Poundland, US unit Mattress Firm and Australia’s Fantastic Furniture, yesterday delivered a 48percent increase in sales to 14.9billion (R231.22bn) for the nine months to end June, boosted by organic sales and the integration and sales development of the acquired businesses. The group said organic revenue, excluding acquisitions, increased 8percent and was led by good growth in the European and African regions.
Chief executive Markus Jooste said: “We are pleased to report that the group’s organic sales momentum, as well as the integration and sales development of the acquired businesses, are progressing well. “Once again the group’s sales growth is underscored by the resilience of the low-price, value and discount market segments in challenging consumer environments as well as the diversity of the group’s sales mix across various geographies,” Jooste said. The group said while it expected the furniture retail market in the UK to remain challenging, the resilience of the bedding retail market was expected to deliver modest growth.
The European and African general merchandise segments were expected to continue their current growth trajectory. In Australia, the addition of Fantastic Furniture is proving highly complementary to the group’s existing Asia Pacific household goods brands.
In the nine months, the group generated 52percent (7.7bn) of sales in Europe, 27percent (4bn) in Africa, 15percent (2.2bn) in the US and 6 percent (1bn) in Australasia.
European sales comprised 73percent (5.6bn) in the household goods division and 27percent (2.1bn) in the general merchandise division.
The acquisition of Poundland becomes unconditional on September 30, and consequently the business will add 1.3bn revenue, which will contribute to the 25percent growth experienced in Europe. In South Africa, like-for-like sales figures were recorded by all group retailers, contributing to the generation of 4bn revenue in the African region.
The 10 percent constant currency growth translated to a 26percent increase in euro-reported numbers as a result of the 15percent strengthening of the rand against the euro. In the US, the Mattress Firm acquisition delivered a satisfactory performance, generating $2.4bn in sales. The group said the separate listing of the Steinhoff Africa Retail assets (Star) on the JSE before the end of September was on track.
Star would create a diversified listed-retail company of a significant size and scale with its roots in Africa, and will house all of Steinhoff’s African retail assets, excluding the automotive division. Star would give Christo Wiese, the largest shareholder in both Shoprite and Steinhoff, an opportunity to consolidate his holdings.
“The separation of Steinhoff’s emerging and developed market retail businesses is a natural progression and will allow investors wishing to access the African growth story to invest directly into Star,” the group said. The group’s share price closed on the JSE 2.65percent stronger at R62.86 yesterday.
– BUSINESS REPORT