Steinhoff reveals sales drop in first trading update since accounting scandal

Steinhoff update

Steinhoff has unveiled its first trading update since an accounting scandal plagued the company throughout December and January, posting a five per cent drop in total group revenue for its first quarter.

The South African retail company said that total revenue for the quarter ended December 31 was €4.86 billion (£4.3 billion), down from the €5.10 billion recorded in the same period the year prior.

The company, which owns UK retailers Poundland, Harveys and Bensons for Beds, added that it has appointed six new independent members to the supervisory board after the resignations of Len Konar, Claas Daun, Bruno Steinhoff and Theunie Lategan.

The earnings report comes as Steinhoff hired accountancy firm PwC in December to conduct an independent investigation into accounting irregularities after it revealed €6 billion black hole, which has caused it to miss a regulatory deadline for its 2017 results.

This set off a chain of events, namely the sudden resignations of chief executive Markus Jooste, chairman Christo Weise and chief financial officer Ben la Grange, and a crash in Steinhoff’s share values.

The company has since said that it needed to restate its 2015 and 2016 financial results, and still has not yet released its 2017 results.

Weise has since sought to lay blame on Steinhoff’s accountants Deloitte for not identifying the issues before the scandal broke.

Jooste has also been arrested by South Africa’s elite Directorate of Priority Crime Investigation unit, which is reserved for the highest tier of criminality, including corruption and organised commercial crime.

In addition, Steinhoff faced renewed pressure last week after a Dutch court ordered the firm to change its 2016 annual results as it took issue with its accounting of a joint venture.

Earlier this month, Steinhoff said it intended to recommend waivers for defaults under some of its financing arrangements and scrap its interim dividend.

It also hired restructuring officer Richard Heis to help create a window of stability, and plans to focus on the performance of its individual businesses and the development of a strategic plan.

Steinhoff has also stated that it has now addressed the near-term liquidity requirements of a number of its units, and was now looking to address its debt.

Steinhoff will hold its annual shareholders meeting in late April, where it will discuss board room appointments, but the proposed adoptions of financial statements would not be put to shareholders as the investigation by PwC continues.

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