JOHANNESBURG – South Africa’s Steinhoff, the world’s second-biggest furniture retailer after IKEA, reported a 48 percent jump in nine-month sales on Thursday, helped by acquisitions and growth in its European and African operations.
The firm is seeking to drum up investor support for spinning off its African operations, a plan that was dealt a blow last week after reports German prosecutors were investigating CEO Markus Jooste and other senior managers for suspected accounting fraud. Steinhoff denied wrongdoing.
The company, which has a primary share listing in Frankfurt and a secondary listing in Johannesburg, said sales totalled 14.9 billion euros ($17.69 billion) in the nine months to the end of June.
Steinhoff, headquartered in Stellenbosch near Cape Town, added Britain’s Poundland, U.S. unit Mattress Firm and Australia’s Fantastic to its portfolio of no-frills retail assets last year.
Jooste said group sales growth was “underscored by the resilience of the low-price, value and discount market segments in challenging consumer environments.”
Steinhoff said this year it wanted to spin off its African retail assets by listing them with a controlling stake in grocer Shoprite on the Johannesburg Securities Exchange as Steinhoff Africa Retail (STAR).
The split between emerging and developed market retail businesses would allow investors keen on exposure to Africa to invest directly in STAR, it said on Thursday.
The move would also give billionaire Christo Wiese, the largest shareholder in both Shoprite and Steinhoff, an opportunity to consolidate his holdings.
“Steinhoff will continue to be a controlling shareholder in the company, while STAR will continue to leverage off Steinhoff’s strategic, centralised sourcing, manufacturing and logistics expertise to maximise operating efficiencies across its retail operations,” the company said.
The retailer makes 27 percent of its sales in Africa, 52 percent in Europe and 15 percent in the United States, it said.
“The European household goods segment remains on track to deliver good operating profit growth for the 12 months ending 30 September 2017,” the company said.
The firm said U.S. sales and profit margin continued to improve following the third quarter.
Johannesburg-listed shares in Steinhoff were up 1.1 percent at 61.90 rand by 0801 GMT, compared to a 0.3 percent rise in the JSE’s benchmark Top 40 index. Frankfurt-listed shares were up 0.9 percent at 3.99 euro.