Steinhoff group revenue falls 6% on Covid-19 store closures, 'uncertainty' ahead

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  • Steinhoff reported a 6% decline in group revenues in the nine months to end June as Covid-19 stores closures cut into earnings. 
  • Total revenues for its Pepkor Africa division, which includes brands like PEP and Ackermans, decreased by €285 million over the period because of the national lockdown.  
  • The group is holding a virtual AGM later on Friday. 


Retail giant Steinhoff says total revenues for its Pepkor Africa division decreased by €285 million (about R5.7 billion at current exchange rates) in the nine months to end June because of the national lockdown.  

The Stellenbosch-headquartered retailer published a trading update for the first three quarters of 2020 on Friday, showing a 6% decline in revenues across the group, largely as a result of Covid-19 trading restrictions imposed worldwide during March 2020.

"While almost all our stores had reopened by the end of June 2020, a significant amount of trade was lost while the stores were closed," it said. 

The retailer reports earnings in euros as it is domiciled in the Netherlands. In constant currency - which eliminates the effect of rand/euro fluctuations, Pepkor's revenue drop changes from 10% to 2%. 

The group's CEO, Louis du Preez, and its CFO, Theodore de Klerk,  said that full impact of pandemic on the 2020 financial year remains uncertain. "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," they said.  

The group has been under a cloud since the abrupt resignation of its former CEO Markus Jooste in December 2017 at the start of a fraud scandal. Its share price has plunged by over 95% since Jooste resigned, while Steinhoff's new leadership has had to deal with billions of euros in debt, legal claims against the company and a tricky restructuring.   

Pepkor, known as Steinhoff Retail Africa before it changed its name in August 2018, is separately listed on the JSE and houses the African operations of the group. It owns more than 5 500 stores in 11 African countries including brands like PEP, Incredible Connection and Bradlows.

Steinhoff said that once the lockdown restrictions were eased, sales levels for PEP and Ackermans change were positive during May and June 2020. 

"Trading was resilient due to the defensive discount and value market positioning, with consumers prioritising apparel spending in areas such as babies’ and children’s clothing and focusing on basic and replenishment products," noted Steinhoff.

Steinhoff said the Pepco Group, which houses most of its European operations, was significantly impacted in the early stages of that continent's lockdown. Strong growth in the period before the lockdown commenced meant it still managed to eke out 2% revenue growth for the nine months under review. 

Despite unfavourable conditions, Steinhoff said continued to expand its footprint in Europe, ending the period with 368 more stores year-on-year and 230 in the nine-month period. This included 97 mainly Pepco new store openings in the middle of the lockdown period between March and June.

At the same time, it disposed of certain operations like the Unitrans automotive business, UK household goods retailer Blue Group as well as few other brands in countries like Switzerland and France.  

Steinhoff will host a virtual AGM on Friday afternoon. 

- Additional reporting by Jan Cronje 

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