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Steinhoff buys Tekkie Town as profit jumps 20%

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Johannesburg - Steinhoff International Holdings [JSE:SHF] said it sees further opportunities for growth in its main markets as the acquisitive South African clothing and furniture retailer announced its latest purchase and reported a 20% rise in full-year profit.

The company agreed to buy Tekkie Town, a South African shoe retailer with 302 stores, Steinhoff said in a report posted on its website on Wednesday, without disclosing the value of the transaction. The deal is expected to close by the end of the calendar year.

Profit attributable to Steinhoff shareholders rose 20% to €1.17bn in the 12 months through June, the company said.

The owner of the Conforama and Bensons for Beds chains earned 73% of its operating profit in Europe, while Africa accounted for 25% and Australasia 2%.

"Steinhoff continues to see opportunities for growth within our key markets," chief executive officer Markus Jooste said in a separate statement. Efforts to integrate the company’s supply chains and reduce costs will help boost profit margins and keep selling prices low, he said.

Evaluating deals

Steinhoff, which has more than 6 500 stores in 30 countries, is seeking to create a global retail group with a focus on the more affordable end of the market, Chairperson Christo Wiese said in an interview last month.

The company has had takeover offers accepted this year for Mattress Holding Corporation in the US and the UK’s Poundland Group. Shareholders in the latter will vote on whether to approve the deal at a meeting on Wednesday.
 
Steinhoff shares gained 0.8% to €5.540 as of 09:32 in Frankfurt, where the company moved its primary listing in December.

Steinhoff is registered in Amsterdam, has a corporate office in Stellenbosch, South Africa, and a secondary listing in Johannesburg.

The stock declined 7.5% on August 31 after the company reported full-year operating profit below analysts’ estimates.

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