Johannesburg – International retailer Steinhoff’s revenue increased 45%, according to its latest quarterly report.
Steinhoff International Holdings' trade update for the quarter ending December 31, 2016 shows continued “sales momentum” from the previous period.
Revenue increased to €5.3bn (R73bn). This follows the retailer’s acquisition of the US business Mattress Firm and UK-based Poundland, which together contributed €1.3bn (R17.9bn) in revenue. Excluding these acquisitions, group revenue increased by 11%, according to the report.
“The group performed well during the first quarter of the 2017 financial year with growth momentum continuing in line with management expectations as our business positioning in the discount segment of the market has continued to be beneficial to the group,” said CEO Markus Jooste.
“Revenue growth achieved in the European General Merchandise segment exceeded our expectations and management must be commended with strong double digit like-for-like sales growth,” he added.
Locally, the Tekkie Town acquisition came in effect on February 1, 2017. This acquisition presents an opportunity for the group to scale to the buying power of the group, in footwear, said the report. Tekkie Town currently has 325 stores.
Revenue in southern Africa operations increased by 30%. Like-for-like revenue growth came to 6% despite difficult market conditions, said the report. JD Group and Steinbuild, which are present in the market, will consider consolidation of retail brands to sustain profitability, explained the group.
The general merchandise division increased revenue by 66% to €1.8bn (R24.84bn).
South Africa reported “double digit revenue growth” in the general merchandise business. This was a result of Pepkor’s defensive business model and its strong footprint growth, the report said. “Despite foreign exchange fluctuations, the operations in the rest of Africa … reported constant growth of more than 20%.”
The Automotive division increased revenue by 6%. Revenue increased by 4% despite weakness in the new and pre- owned vehicle markets in South Africa, said the group.
Based on the group’s performance during the first quarter, Steinhoff management remains confident that the business will continue on its growth path and performance will be in line with expectations, the report said.
Recently, a merger between food retailer Shoprite and Steinhoff fell apart after their biggest shareholders were unable to reach agreement on price.
Shoprite’s share rose as much as 5% when the merger was dropped, Fin24 reported. The deal would have created the continent’s biggest retailer, with sales of more than R200bn.
Shoprite chairperson Christo Wiese, owns a 23% stake in Steinhoff and a 16% stake in Shoprite. Wiese indicated that Shoprite will explore expansion outside Africa.Read Fin24's top stories trending on Twitter: Fin24’s top stories