Steinhoff [JSE:SNH] has announced that its Australian furniture subsidiary, Greenlit Brands, will sell its general merchandise division.
The retail conglomerate, in an update to shareholders, said the division would be sold to Australian capital market company Allegro Funds. The value of the transaction was not disclosed.
"The sale of Greenlit Brands General Merchandise division is a further step in Steinhoff's programme of planned divestments, as we continue with our announced strategy of simplifying the group's portfolio and deleveraging our balance sheet," Steinhoff CEO Louis du Preez said.
Steinhoff has a group debt burden of almost €9bn (R146bn).
Greenlit Brands is an integrated retailer and manufacturer of furniture, household goods and clothing. According to Steinhoff's website it has more than 640 stores in Australia and New Zealand.
In a separate statement , Greenlit Brands said its general merchandise division includes 322 stores with over 6 100 employees. Following the sale, the Steinhoff subsidiary will be left with 319 stores with more than 3 800 employees.
"Disposal of the general merchandise business is a significant strategic initiative which will allow Greenlit Brands to concentrate on its core household goods brands and optimise their already-strong position in the Australian and New Zealand marketsm" it said.
"In a sense, this transaction sees us return to our roots as a focussed household goods group with a ladder of brands with demonstrable integration and as always, striving for our ambition to achieve remarkable retail," said Greenlit Brands CEO and executive chair Michael Ford.
The transaction is expected to be completed by the beginning of December, and Greenlit Brands will remain a wholly-owned Steinhoff subsidiary.
The announcement comes days after Steinhoff announced it will sell its loss-making UK furniture business, Blue Group, to specialist European retailer Alteri Investors.
Steinhoff stock opened at 92 cents on Monday morning.