Steinhoff boosts revenue by 14% as customers look to discount stores in tough economy

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A Poundland store in the UK, part of Steinhoff's Pepco Group.
A Poundland store in the UK, part of Steinhoff's Pepco Group.
Poundland
  • Steinhoff says it grew its revenue by 14% in the past financial year as customers flocked to its discount retail stores in Europe and Africa. 
  • The group is now focusing on reducing its debt burden of €9.8 billion, which still exceeds total revenues from all its operations.
  • The retailer is also nearing the end of a complex legal process to make a deal with investors who lost out when its share price plunged in late 2017. 

Retailer Steinhoff has reported a 14% increase in revenue across its operations for the year ending 30 September 2021. 

In its annual report published on Friday, Steinhoff said higher sales, an expanded store footprint and the easing of Covid-19 restrictions contributed to increased revenues. 

Total revenue across its operations in South Africa, Europe, the US and Australasia grew from €8.03 billion in 2020 to €9.19 billion in 2021. The group publishes its results in euros, as it is domiciled in the Netherlands. 

Steinhoff said its African subsidiary, JSE-listed Pepkor Holdings, held its own in a challenging retail environment.

"From an operating environment perspective, the discount and value retail sectors continue to be favoured by customers, with reduced consumer spending as a result of increased unemployment and the effects of a poorly performing economy," it said. Revenue increased from €3.89 billion in 2020 to €4.35 billion in 2021. 

The group's European operations, which have been bundled together into the Pepco Group listed on the Warsaw Stock Exchange, grew revenue by 18% from €3.5 billion to €4.1 billion. The increase was driven, in part, by the addition of 364 new stores, including the retailer's first Pepco stores in Austria, Spain and Serbia.

Steinhoff said its key challenge in the 2022 financial year would be reducing its total group services debt of €9 835 billion, which still exceeds its total revenues. This would be done, in part by more asset disposals.

During the past year, the group received about €1 billion from the listing of the Pepco Group, which it used to reduce debt. The company also received a €520 million distribution from its US-based associate business Mattress Firm, which has filed to list on the New York Stock Exchange.

Litigation 

Earlier this week a court approved Steinhoff's bid to have its €1.43 billion (R25 billion) settlement proposal with investors who lost out in its share price crash made final and binding.

If no appeals are lodged by 15 February, payouts to investors can begin a group called the Steinhoff Recovery Foundation. As part of the deal, claimants will have to drop all current and future legal actions against the retailer.

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