Steinhoff International

Steinhoff International is a South African-German-Dutch international retail holding company that is dual listed in Germany and South Africa. Steinhoff deals mainly in furniture and household goods, and operates in Europe, Africa, Asia, the United States, Australia and New Zealand.

Steinhoff International Holdings N.V.
TypePublic
IndustryRetail
Founded1964; 58 years ago (1964)
(Westerstede, Lower Saxony, Germany)
FoundersBruno Steinhoff
Headquarters,
Key people
Markus Jooste (former CEO)
RevenueIncrease EUR 12.9 billion (2017/18 - 9 months)[1]
Number of employees
Increase 130,000 (2018)[2]
DivisionsPep&Co
SubsidiariesConforama
Mattress Firm
Poundland
Websitewww.steinhoffinternational.com
Conforama in Wallisellen, Switzerland
Plant in Kłodzko

HistoryEdit

Steinhoff was founded in 1964 by Bruno Steinhoff in Westerstede, Germany.[3][4] Bruno Steinhoff sourced furniture from communist Europe and sold it in Western Europe. In 1997, Steinhoff acquired 35% of South-Africa-based Gommagomma, preparing for a merger the following year. The company moved its headquarters to South Africa in 1998, attracted by the low production costs, and went public on the Johannesburg Stock Exchange that same year.[5]

In 2005, Steinhoff invested £86 million to revive the UK's Homestyle Group, thus taking ownership of the company.[5]

In 2011, Steinhoff bought Conforama, Europe's second largest retailer of home furnishings, with over 200 stores in France, Spain, Switzerland, Portugal, Luxembourg, Italy and Croatia, spending $1.2 billion for the acquisition.[5]

In 2015, South African low-end retail investment and holding company Pepkor became a member of the Steinhoff International Group for $5.7 billion which made Christo Wiese Steinhoff's largest shareholder and chairman.[5][6]

In December 2015, Steinhoff International moved its primary listing from the Johannesburg Stock Exchange to the Frankfurt Stock Exchange, and founded a new Dutch holding company Steinhoff International Holdings NV based in Amsterdam.[7] This shift reflected Steinhoff's shift from its traditional Indian Ocean basin markets to the European market.[7] The management remained in South Africa.[citation needed] As of 12 May 2020, Steinhoff International Holdings NV is headquartered in Amsterdam.[8]

In March 2016, Steinhoff is a member of MDAX with capitalization of over 20 billion Euros but has a low trading volume.[9]

In July 2016, UK discount retail chain Poundland accepted Steinhoff's takeover offer of £597 million[10] which was then increased by Steinhoff to £610 million in August 2016.[11] The takeover received shareholder approval in September 2016.[12]

In August 2016, Steinhoff announced its plan to purchase the US-based Mattress Firm for $3.8 billion.[13] In 2017, Mattress Firm split from its supplier Tempur Sealy.[14] In October 2018, Mattress Firm filed for bankruptcy[14][15] but emerged from Chapter 11 bankruptcy 2 months later after financial restructuring with support from AlixPartners LLP which is a consulting firm.[16][17]

A$1.9 billion margin loan was provided to Steinhoff by a consortium of lenders, including Japanese bank Nomura and a range of U.S. institutions.[18] Nomura confirmed that it had booked an unrealised loss of 14 billion yen (or $128 million in 2018 dollars). The loan itself had been partly organised by Steinhoff's Chairman, Christo Wiese.[7][17] Earlier in 2018, Steinhoff incurred accounting irregularities uncovered by Deloitte in December 2017 when Deloitte refused to sign the annual audit and booked a write-off of $12 billion.[17][19] In early December 2017, Wiese announced that PricewaterhouseCoopers would investigate.[7][20]

February 2018, the Enterprise Chamber of the Amsterdam Court required Steinhoff to relinquish to Andreas Seifert of XXXLutz 50% of the Steinhoff stake in POCO to indicate that Steinhoff had a 50% controlling stake not a 100% controlling stake in POCO.[21] This court case predated cases with the accounting irregularities revealed in late 2017.[21] In April 2018, a German court in Dortmund found that Steinhoff International could sell its remaining 50% stake in POCO to Andreas Seifert of XXXLutz for a multiple of POCO earnings which was estimated to be €532.5 million.[22][23] This resulted in XXXLutz, which was the second largest furniture retailer in Europe behind only IKEA, becoming the largest furniture retailer in Germany.[24][25]

Following the sale of its POCO stake in April 2018, Steinhoff will develop its markets in Eastern Europe (Pepco) and Britain (Poundland) through its Pepkor Europe assets alongside its core interests in South Africa.[26]

On 25 April 2018, Extreme Digital, a Hungarian e commerce firm acquired by Steinhoff in October 2015, was resold to their founders Balázs Várkonyi and Gyula Kelemen through their buying back shares.[22][27]

As of August 2019, Steinhoff creditors had received a 50% stake in Conforama.[26]

In September 2019, Steinhoff replaced Deloitte with Mazars as the firm's auditors.[19]

In November 2019, UK chains Bensons for Beds and Harveys and upholstery and bedding manufacturer Relyon were sold by Steinhoff to UK-based private equity group Alteri Investors.[28]

On 8 July 2020, Steinhoff sold its remaining stake in Conforama France to Mobilux Sàrl which has been the furniture retailer BUT's parent company since 2016.[29][30][31] Mobilux has 50-50 ownership by both Andreas Seifert's WM Holding, which is associated with XXXLutz through its owner Andreas Seifert, and the American investment firm Clayton, Dubilier & Rice (CD&R).[30][31] In France, IKEA is the largest furniture retailer with a 15.43% market share and Conforama and BUT have market shares of 10.86% and 10.34% which are second and third, respectively.[30]

ControversiesEdit

In late November 2015, Steinhoff Europe Group Services (SEGS) offices in Westerstede were raided by German law authorities and in December 2015 German tax authorities began an investigation.[6] Documents signed by the Austrian Andreas Seifert of XXXLutz were seized but he said that documents and his signature had been forged.[32] Andreas Seifert of Poco and Conforama was associated with Steinhoff since 2010 when Steinhoff had acquired the French firm Conforama.[9][24]

On 5 December 2017 the CEO Markus Jooste, who had been under investigation by German authorities at Oldenburg, resigned after the company announced accounting irregularities. The share price immediately plunged 66% and went on to fall by over 90% as it emerged that the company had overstated profits and assets by nearly $12 billion.[6][32][33]

In December 2017, the Standing Committee on Finance of the Parliament of the Republic of South Africa condemned Steinhoff and called for investigations of the company by regulatory bodies including the Financial Services Board (FSB) and the South African Reserve Bank (SARB).[34][35][36]

Since April 2018, Peter N. Wakkie, a Dutch attorney who is closely associated with Mikhail Fridman, has been the deputy chairman and was previously the acting chairman of supervisory.[37][38][39]

A PricewaterhouseCoopers investigation, requested by Steinhoff, reported in March 2019 that "A small group of Steinhoff Group former executives and other non-Steinhoff executives, led by a senior management executive, structured and implemented various transactions over a number of years which had the result of substantially inflating the profit and asset values of the Steinhoff Group over an extended period" and went on to state "it appears that the Steinhoff Group entered into a number of transactions (some of which were fictitious or irregular) with allegedly independent third party entities which resulted in the inflation of profits and asset values."[40] The report revealed irregular transactions with eight firms not tied to the Steinhoff group from 2009 and 2017 amounted to $7.36 billion.[41]

In March 2019 the company share price was still down 96% from its value before the scandal erupted.[42]

In September 2019, during a presentation to their investors, the company announced its intentions to sell off non-retail assets and cut jobs at French retail chain Conforma and urgently address its $10 billion debt.[43]

On 4 March 2021, German prosecutors in Oldenburg revealed that Markus Jooste and three others had been secretly charged four months earlier with the first indictments from the German investigations.[44]

BrandsEdit

As of August 2016, Steinhoff held retailing activities in 30 countries, counting 6,500 retail outlets belonging to 40 different brands, and employing about 90,000 employees.[1] 60% of the company's revenue, and two-thirds of its benefits, are made in Europe.[5]

Steinhoff's South African brands include Ackermans, Buco, Dunns, Flash, HiFi Corp, Incredible Connection, John Craig, Pennypinchers, Pep, Refinery, Russels, Shoe City, Tekkie Town, Timbercity and Unitrans.[45] Powersales is another African Steinhoff brand.

In the UK, Steinhoff owns the high street brands Pep&Co, Poundland and Sleepmaster.

In Ireland, Steinhoff operates Dealz and Pep&Co. Steinhoff's other European brands include Pepco and Kika in Poland, Slovakia and Hungary.

Steinhoff expanded into the United States market on 7 August 2016 when it acquired Mattress Firm.[13]

Steinhoff International is part of the Hertz network of car rentals.[27]

ReferencesEdit

  1. ^ a b "QUARTERLY UPDATE NINE MONTHS ENDED 30 JUNE 2018 (9MFY18) (UNAUDITED)" (PDF). Steinhoffinternational.com. Retrieved 1 November 2018.
  2. ^ "2014/15 results" (PDF). Steinhoff International Holdings N.V. Retrieved 12 December 2015.
  3. ^ Kew, Janice (6 December 2017). "The Rise and Fall of Steinhoff, South Africa's Global Retailer". Bloomberg. Retrieved 11 October 2018.
  4. ^ "Steinhoff returns to German roots | IOL Business Report". Retrieved 11 October 2018.
  5. ^ a b c d e Andrew England (24 February 2016). "Home Retail bid fits Steinhoff's bold strategy for expansion". Financial Times. Retrieved 5 August 2016.
  6. ^ a b c "Inside the Steinhoff saga, one of the biggest cases of corporate fraud in South African business history". CNBC Africa. 28 June 2018. Archived from the original on 9 March 2021. Retrieved 12 March 2021.
  7. ^ a b c d Çam, Deniz (7 December 2017). "South African Retail Tycoon Loses Billionaire Status Amid Accounting Crisis". Forbes. Retrieved 12 March 2021.
  8. ^ "Steinhoff International". Forbes. 12 May 2020. Archived from the original on 12 March 2021. Retrieved 12 March 2021.
  9. ^ a b Kaiser, Arvid (4 March 2016). "MDax-Neuling Steinhoff Möbel: Der große Ikea-Rivale, den Sie nicht kennen (aber kennen sollten) (1)" [MDax newcomer Steinhoff Möbel: The Big Ikea Rival You Didn't Know (But Should Know) (1)]. Manager Magazin (in German). Archived from the original on 24 September 2017. Retrieved 12 March 2021.
  10. ^ "Poundland agrees to £597m takeover from Steinhoff". BBC News. 13 July 2016. Retrieved 29 October 2016.
  11. ^ "Poundland agrees higher takeover offer from Steinhoff". BBC News. 11 August 2016. Retrieved 29 October 2016.
  12. ^ Bradshaw, Julia (7 September 2016). "Steinhoff seals Poundland takeover after shareholders give blessing". The Telegraph. Retrieved 29 October 2016.
  13. ^ a b "South Africa's Steinhoff to Buy Mattress Firm for $3.8 Billion". Fortune. Reuters. 8 August 2016. Retrieved 9 August 2016.
  14. ^ a b Carlson, Marten (12 February 2019). "Serta Simmons And Tuft & Needle Announce Merger". Mattress Clarity. Retrieved 12 March 2021.
  15. ^ Kary, Tiffany (5 October 2018). "Steinhoff's Mattress Firm Goes Bankrupt, Shuts Some Stores". Retrieved 11 October 2018.
  16. ^ "Mattress Firm emerges from Chapter 11 bankruptcy after less than 2 months". Phoenix business journal.
  17. ^ a b c DiNapoli, Jessica (6 August 2018). "Exclusive: Mattress Firm explores U.S. bankruptcy to close stores". Reuters. Retrieved 12 March 2021.
  18. ^ Hyuga, Takahiko (1 February 2018). "Nomura Lost Millions on Margin Loan Tied to Steinhoff". Bloomberg News. Archived from the original on 6 February 2018. Retrieved 12 March 2021.
  19. ^ a b Cronje, Jan (15 February 2021). "Deloitte agrees to pay out up to R1.3bn in compensation to claimants against Steinhoff". News24. Retrieved 12 March 2021.
  20. ^ "Steinhoff announces investigation into accounting irregularities and resignation of CEO" (PDF). steinhoffinternational website. 5 December 2017. Archived from the original (PDF) on 9 June 2019. Retrieved 12 March 2021.
  21. ^ a b Reuters staff (19 February 2018). "Dutch court rules Steinhoff must amend 2016 accounts". Reuters. Retrieved 12 March 2021.
  22. ^ a b Matussek, Karin; Simon, Zoltan (26 April 2018). "Steinhoff sells half of POCO to Andreas Seifert, ending a bitter dispute". Business LIVE (www.businesslive.co.za). Retrieved 12 March 2021.
  23. ^ "Restliche Poco-Anteile werden an XXXLutz verkauft. Nach einem längeren Streit haben sich Steinhoff und die XXXLutz-Gruppe geeinigt: Steinhoff verkauft seine Poco-Anteile. Das spült dem schwer angeschlagenen Möbelkonzern 266 Millionen Euro in die leeren Kassen" [The rest of the Poco shares are sold to XXXLutz. After a lengthy dispute, Steinhoff and the XXXLutz Group have come to an agreement: Steinhoff sells its Poco shares. That flushes the badly ailing furniture company 266 million euros into the empty coffers.]. Handelsblatt (WirtschaftsWoche) (in German). 26 April 2018. Retrieved 12 March 2021.
  24. ^ a b Kaiser, Arvid (4 March 2016). "MDax-Neuling Steinhoff Möbel: Der große Ikea-Rivale, den Sie nicht kennen (aber kennen sollten) (2)" [MDax newcomer Steinhoff Möbel: The Big Ikea Rival You Didn't Know (But Should Know) (2)]. Manager Magazin (in German). Archived from the original on 24 September 2017. Retrieved 12 March 2021.
  25. ^ Kolf, Florian; Siebenhaar, Haans-Peter (15 October 2019). "Andreas Seifert baut seine Marktmacht im Möbelsegment aus – zum Leidwesen der Rivalen:Der Chef des Möbelhändlers XXXLutz aus Österreich steigt bei den Möbelketten Roller und Schulenburg ein – und baut so sein Imperium aus" [Andreas Seifert is expanding his market power in the furniture segment - to the chagrin of his rivals: The head of the furniture retailer XXXLutz from Austria adds the furniture chains Roller and Schulenburg - and thus expands his empire.]. Handelsblatt (in German). Retrieved 12 March 2021.
  26. ^ a b Kolf, Florian (16 August 2019). "Bilanzskandal und Schulden in Milliardenhöhe: Steinhoff kämpft ums Überleben: Das Möbelunternehmen war jahrelang erfolgreich, aber jetzt ist seine Existenz bedroht. Der neue Verwaltungsrat räumt auf, aber eine Welle von Klagen von Investoren gefährdet die Zukunft" [Balance sheet scandal and billions in debts: Steinhoff is fighting for survival: The furniture company was successful for years, but now its existence is threatened. The new board of directors is cleaning up, but a wave of lawsuits from investors endangers the future.]. Handelsblatt (in German). Retrieved 12 March 2021.
  27. ^ a b ZSIBORÁS, GERGŐ (25 April 2018). "Extreme Digital: visszavásárolják részüket a magyar alapítók: Visszavásárolja üzletrészét a könyvelési botrányba keveredett globális multitól az Extreme Digital magyar alapítópárosa, Várkonyi Balázs és Kelemen Gyula. Ezt ma jelentették be sajtótájékoztatón. A cégbe 2015-ben vásárolta be magát a dél-afrikai Steinhoff International" [Extreme Digital: Hungarian founders are buying back their shares: Extreme Digital's Hungarian founding couple, Balázs Várkonyi and Gyula Kelemen, are buying back their share of the global multitude involved in the accounting scandal. This was announced at a press conference today. The company was acquired in 2015 by Steinhoff International of South Africa.]. Forbes (in Hungarian). Retrieved 12 March 2021.
  28. ^ Eley, Jonathan (15 November 2019). "Steinhoff sells UK furniture business to Alteri Investors". Financial Times. Retrieved 1 July 2020.
  29. ^ Reuters staff (8 July 2020). "Steinhoff agrees to sell stake in Conforama France to Mobilux". Reuters. Retrieved 12 March 2021.
  30. ^ a b c Prudhomme, Cécile (8 July 2020). "Ameublement : les actionnaires de But rachètent Conforama en France: L'objectif de Mobilux est de créer le leader européen du marché du mobilier, capable de rivaliser avec le géant suédois Ikea" [Furniture: But shareholders buy Conforama in France: Mobilux's goal is to create the European leader in the furniture market, capable of competing with the Swedish giant Ikea.]. Le Monde (in French). Archived from the original on 9 March 2021. Retrieved 12 March 2021.
  31. ^ a b "Conforama France racheté par But pour être plus forts à deux" [Conforama France bought by But to be stronger together]. Le Figaro (in French). 8 July 2020. Archived from the original on 11 March 2021. Retrieved 12 March 2021.
  32. ^ a b Schwarzer, Ursula; Clausen, Sven (24 August 2017). "Ermittlungen gegen CEO Markus Jooste wegen Bilanzfälschung: Chef des Möbelherstellers Steinhoff im Visier der Justiz" [Investigations against CEO Markus Jooste for falsifying accounts: Head of the furniture manufacturer Steinhoff in the sights of the judiciary]. Manager Magazin (in German). Archived from the original on 26 August 2017. Retrieved 12 March 2021.
  33. ^ "Steinhoff takes $12 billion writedown after accounting scandal". Reuters UK.
  34. ^ "Finance Committee Outraged by Irregularities at Steinhoff - Parliament of South Africa". www.parliament.gov.za. Retrieved 14 December 2017.
  35. ^ "Parliament's finance committee lashes out at Steinhoff". Fin24. Retrieved 11 October 2018.
  36. ^ "Parliamentary committees condemn Steinhoff scandal". Retrieved 11 October 2018.
  37. ^ "Peter N. Wakkie". Bloomberg. Archived from the original on 5 February 2021. Retrieved 4 February 2021.
  38. ^ Hensen, Chris; van der Heijden, Teri (26 January 2017). "'Peter Wakkie ís helemaal niet onafhankelijk'" ['Peter Wakkie is not independent at all']. NRC Handelsblad (in Dutch). Archived from the original on 19 July 2018. Retrieved 10 February 2021.
  39. ^ Smits, Henk Willem (9 April 2015). "Is Peter Wakkie, de bonus-commissaris van ABN Amro, zelf een beetje rijk?" [Is Peter Wakkie, ABN Amro's bonus supervisory director, a bit rich himself?]. quotenet.nl (in Dutch). Archived from the original on 18 September 2020. Retrieved 10 February 2021.
  40. ^ "15 March 2019 OVERVIEW OF FORENSIC INVESTIGATION" (PDF). Steinhoff International corporate website.
  41. ^ "Steinhoff Deals Come Back to Haunt Retailer in PwC Investigation". Bloomberg.
  42. ^ "SA financial authorities '2 months' away from closing in on Steinhoff fraud". BizNews.
  43. ^ "Steinhoff looks to sell off assets after $7 billion accounting fraud". Moneycontrol. Retrieved 3 September 2019.
  44. ^ Matussek, Karin; Bowker, John (4 March 2021). "Ex-Steinhoff CEO said to be charged in German criminal probe". BizNews.com. Retrieved 12 March 2021 – via Bloomberg News.
  45. ^ "Group overview". Steinhoff International Holdings. Archived from the original on 25 March 2016. Retrieved 25 March 2016.

External linksEdit

  Media related to Steinhoff International Holdings at Wikimedia Commons