JOHANNESBURG - Steinhoff Africa Retail (STAR) yesterday said that it had increased its revenue to R58.6billion on the back of a strong performance from its discount and value segment.
The group said the division - which consists of Pep Stores, Ackermans, Russells, Bradlows, Flash and Poco - contributed R44.1bn to overall revenue for the year to end September.
It said the unit increased its footprint in South Africa to 3679 stores, adding that Pep and Ackermans played a major role in the revenue, increasing 6.5% on a comparable like-for-like basis.
Chief executive Ben la Grange said: “Our strategic discount and value proposition and ongoing store rollouts have enhanced the group’s ability to provide our customers with better access to affordable products and services, resulting in continued growth momentum for STAR. Maintaining a low cost of doing business is always a core focus area within all our retail brands.”
STAR’s other segment, speciality, which includes the do-it-yourself (DIY) and building materials; electronics and appliances (G2); fashion and footwear; and bedding brands, contributed approximately 25percent to group revenue.
Operating margin also strengthened, supported by improved profitability in the DIY business and improved performance in the other retail brands. The group said its focus on price leadership and value offerings across its expanding store footprint drove market share gains in major retail brands.
Overall the group saw its revenue increasing by 13.2% to R58.6bn, while operating profit before capital items increased by 25.2% to R6.1bn. Operating margin increased by 100 basis points to 10.4%.
STAR listed on the JSE in September, resulting in a placement of 800million shares, 23.19% of share capital, at R20.50 a share and raising R16.4bn. Last week, the group said it would exercise call options and acquire 128.2million Shoprite ordinary indirectly shares from various parties.
La Grange said the group was now waiting for regulatory approvals.
He said he expected these to be finalised around mid-2018, adding that once implemented, STAR would indirectly acquire a 23.1% economic interest in Shoprite and 50.6% voting control. “A strategic investment in a leading African food and grocery retailer will support STAR’s ability to further enhance its relevance to the growing African consumer base and better protect its ability to compete against international retailers”, La Grange said. The acquisition of Tekkie Town in February saw an additional 308 stores being incorporated into the group.
STAR’s total store network further expanded with 272 net store openings, resulting in a total store footprint of 4953 stores.
La Grange said the group was well on track to open another 350 stores during the 2018 financial year.
“The bulk of the stores will be opened in South Africa, with only 5% in the rest of the continent,” he said.
Jordan Weir, an equities trader at BayHill Capital, said STAR’s results were positive all round, with Pep and Ackermans acting as main contributors to the 13.2% revenue growth.
“As the company homed in on its cost-cutting strategy to access new products and services through existing infrastructure, the group’s operating profit growth was also amplified during the period. The rollout of new stores into Africa is set to continue in 2018, while sales volumes are expected to remain strong as STAR’s offerings continue to attract price-sensitive consumers in a pressured economic environment,” Weir said.
STAR’s shares dropped 1.4%to R25.35 on the JSE yesterday.