Steinhoff Africa Falls After Struggling to Break From Parent
(Bloomberg) -- Steinhoff Africa Retail Ltd. extended a two-day fall to more than 10 percent after the continent’s biggest clothing retailer said it won’t pay a half-year dividend and announced charges related to its scandal-hit parent company.
The owner of clothing chains including Pep and Ackermans was spun off by Steinhoff International Holdings NV three months before the majority shareholder reported accounting wrongdoing that wiped 90 percent off its market value. STAR, as the South African retailer is known, is now considering a name change and has been on the hunt for new non-executive directors that have no connection with Steinhoff, which still owns a 71 percent stake.
“It is understandably difficult for the market to comprehend what the impact of the events at Steinhoff is or can be,” Cape Town-based STAR said in a statement Tuesday. The company will put aside 500 million rand ($40 million) that may be used to compensate management of Pepkor Holdings Ltd., who have lost out due to the decline in Steinhoff stock. Steinhoff bought Pepkor for $5.7 billion in 2015.
STAR shares, which were initially dragged down by the panic that ensued from the revelations at Steinhoff, are still 21 percent lower since the company listed in September, valuing STAR at 56 billion rand. They traded 4.1 percent lower at 16.21 rand as of 10:36 a.m. in Johannesburg.
STAR said revenue gained 10 percent to 33 billion rand in the six months through March, while operating profit rose 9 percent. The company, which has more than 5,100 stores, revised down its store-opening plan to 330 for the full year from 350.
©2018 Bloomberg L.P.