Steinhoff reported an 13.6% increase in quarterly revenue in a welcome boon for the embattled retailer as it grapples with paying debts.
The company, valued at R1.28bn on the JSE, said year-on-year revenue in the three months to end-December rose €3.2bn (about R62.2bn), boosted by strong growth at its Pepco Group and Greenlit Brands.
European discount variety retailer Pepco, which accounted for 46.7% of Steinhoff’s revenue from continuing operations in its 2022 year, said sales rose more than one-fifth to €1.65bn.
That was driven in part by Steinhoff, which also owns the Poundland and Dealz brands, opening 105 stores and starting operations in Greece. The group aims to open 550 net new outlets in its 2023 financial year.
On a like-for-like basis, the group benefited from last year’s lower base when Covid-19 and government restrictions hampered trading.
“Pepco, in particular, capitalised on very strong Christmas trading where they benefited from enhanced stock levels in the fourth quarter of 2022,” Steinhoff said. “Inflation remains at elevated levels across the Pepco Group markets, albeit with inflation in clothing and footwear running significantly below the headline inflation rates.”
Pepkor, which contributed 46% of revenue in 2022, reported a 4% rise in sales to €1.35bn, thanks to opening 132 stores in the trading period.
But on a like-for-like basis, group sales fell 1% as power outages hurt trading even though seven out of 10 stores have backup power.
“The number of trading hours lost during the quarter increased by 221% on the comparable quarter last year,” Steinhoff said.
Earlier this month, Steinhoff raised €257m in capital via the placement of shares in Pepkor as it stares down a €10bn debt burden, reducing its stake in the low-cost retailer to to 43.8% from 51%. Still, the group regards its stake in Pepkor as a strategic investment.
The €10bn debt is due in June and it is in negotiations with lenders for an extension. It has offered them 80% of the group’s equity in exchange for a restructuring of what it owes.
Steinhoff has been fighting for its survival since accounting fraud at the firm was revealed in December 2017 when it came to light that it had misstated profit and asset values.
Former CEO Markus Jooste is among four former Steinhoff executives who will go on trial for the fraud in Germany, where the company has its primary listing, in early May.
Since the company’s auditors refused to sign off its accounts in late 2017, it has lost more than 99% of its value after being valued at R240bn at one point.
With Katharine Child
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