Steinhoff International’s shares surged by almost 17% on Friday after the owner of Mattress Firm, Pepco Group, and Pepkor Holdings reported that for the three months ended December 31, 2022, its revenue increased 14%, boosted by a growing store base in Europe.
The shares later closed Friday 13.33% at 34c. The shares have decreased by 87.85% in the past six months.
In its trading update released on Friday, the debt-riddled group said revenue grew by 14% to €3.2 billion (R62bn) in the first quarter, driven by a 22% rise in the revenue from pan-European discount retailer Pepco, which accounted for about half of its total revenue.
The Pepco group, which owns the Pepco and Dealz brands in Europe and the Poundland brand in the UK, increased revenue despite trading conditions remaining challenging and as consumers opted for cheaper clothing.
Meanwhile, the revenue of Pepkor, the owner of Ackermans, Pep and Incredible Connection increased by 4% to €1.4bn.
“Trading performance during the quarter was negatively impacted by unprecedented levels of electricity disruptions in South Africa, notwithstanding 70% of stores being able to trade during load shedding through backup power systems.
“The impact of load shedding was more pronounced in the rural and deeper outlying areas where the group’s retail footprint has higher representation. The number of trading hours lost during the quarter increased by 221% on the comparable quarter last year,” it said.
The Mattress Firm revenue decreased by 3% in the comparative quarter (decreased by 14% in constant currency) to €953 million.
“There are a number of macroeconomic factors and uncertainties that have affected, and will continue to impact, the overall economic environment, such as the conflict in Ukraine, inflation, both in labour and supply costs, housing market headwinds, rising interest rates, and general market volatility,” Steinhoff said.
These factors might have several adverse effects on overall economic conditions and the markets in which Mattress Firm operated, Steinhoff said.
Greenlit Brands produced a strong results, with sales increasing by 13% to €204m. In December, the increase was 15% in constant currency.
“Disruptions around the supply chain continued to normalise throughout the second half of the calendar year 2022,” it said.
And the group is settling its legal claims after the December 2017 revelations of accounting irregularities in the Steinhoff group resulted in the share price dropping more than 95%.
Steinhoff said last week it had reached a full and final settlement with certain LSW Entities, an Austrian company linked to a former business partner, of all outstanding litigation between the parties to be concluded before the Commercial Court of Vienna for a total payment of €202.12m.
“The Settlement is subject to the fulfilment of certain conditions, including Steinhoff Group lender consent,” it said.
Looking ahead, Steinhoff said it was important to restructure the group services’ debt.
“While the group believes that the Maturity Extension Transaction constitutes an important and positive step towards extending the Group Services’ Debt, there is no certainty that the necessary approvals will be obtained to successfully implement the proposed transaction,” it said.
BUSINESS REPORT