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- Steinhoff reported a 6% decline in the group’s revenue in the nine months to the end of June, as Covid-19 store closings reduced profits.
- Total revenue for its Pepkor Africa division, which includes brands such as PEP and Ackermans, decreased by € 285 million during the period due to the national shutdown.
- The group will hold a virtual annual general meeting later on Friday.
Retail giant Steinhoff says its Pepkor Africa division’s total revenue declined by € 285 million (around R5.7 billion at current exchange rates) in the nine months to the end of June due to the national shutdown.
The Stellenbosch-based retailer on Friday released a business update for the first three quarters of 2020, showing a 6% decline in revenue across the group, largely as a result of Covid-19 business restrictions imposed on around the world during March 2020.
“While almost all of our stores had reopened by the end of June 2020, a significant amount of trade was lost while the stores were closed,” he said.
The retailer reports his earnings in euros, as he is domiciled in the Netherlands. In constant currency, which eliminates the effect of fluctuations in the rand / euro, Pepkor’s revenue decline changes from 10% to 2%.
The group’s chief executive officer, Louis du Preez, and its chief financial officer, Theodore de Klerk, said the full impact of the pandemic in financial year 2020 remains uncertain. “It is clear, however, that the virus outbreak and the resulting restrictions have had a negative impact on overall turnover and 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 plummeted more than 95% since Jooste resigned, while Steinhoff’s new leadership has had to deal with billions of euros in debt, lawsuits against the company and a complicated restructuring.
Pepkor, known as Steinhoff Retail Africa before changing its name in August 2018, is listed separately on the JSE and is home to the group’s African operations. It has more than 5,500 stores in 11 African countries, including brands such as PEP, Incredible Connection and Bradlows.
Steinhoff said that once lockdown restrictions were eased, PEP and Ackermans’ sales levels turned positive during May and June 2020.
“Trade was resilient due to the defensive positioning of the discount and value market, with consumers prioritizing spending on clothing in areas such as baby and children’s clothing and focusing on commodities and restocking,” Steinhoff said.
Steinhoff said Pepco Group, which houses the majority of its European operations, was significantly affected in the early stages of the shutdown on that continent. Strong growth in the period before the lockdown began meant that it still managed to achieve 2% revenue growth during the nine months under review.
Despite unfavorable conditions, Steinhoff said it continued to expand its presence in Europe, ending the period with 368 more stores year-over-year and 230 over the nine-month period. This included 97, mainly new Pepco store openings in the middle of the closing period between March and June.
At the same time, it got rid of certain operations such as the Unitrans car business, the UK home goods retailer Blue Group, as well as some other brands in countries like Switzerland and France.
Steinhoff will host a virtual AGM on Friday afternoon.
– Additional report by Jan Cronje
