Published: Thu, December 07, 2017
Economy | By Melissa Porter

What retail chain Steinhoff's accounting troubles mean for Australia

What retail chain Steinhoff's accounting troubles mean for Australia

In the same statement, the South-African retailer also announced that its chief executive Markus Jooste would be leaving the company with immediate effect.

Its European operation expanded a year ago to include United Kingdom discount retailer Poundland.

Shares in the owner of Poundland fell by 60 per cent after it announced a probe into accounting irregularities and that the chief executive had unexpectedly tendered his resignation.

"The supervisory board, in consultation with the statutory auditors of the company, has approached PwC to perform an independent investigation". It warned it might have to restate financial statements from prior years.

Steinhoff said Wiese would "embark on a detailed review of all aspects of the company's business with a view to maximising shareholder value", but its South African shares had slumped 61 percent to close at 15.87 rand, after hitting an eight-year low of 13.50 rand in earlier trading. Besides Australia and South Africa, it owns retail chains in the UK, Europe and the USA, as well as controlling other African retailing businesses.

Steinhoff reminded shareholders in a statement that it "has a number of high quality profitable businesses around the world" and urged them to "exercise caution".

"The supervisory board of Steinhoff wishes to advise shareholders that new information has come to light today which relates to accounting irregularities requiring further investigation", it said in a statement.

South Africa-headquartered, Dutch-registered Steinhoff has also been under investigation for suspected accounting irregularities by the state prosecutor in Oldenburg, Germany since 2015.

Jooste, who had been with Steinhoff since 1988 and was CEO of Steinhoff International since 2000, was credited with growing the South African furniture manufacturer and retailer into Europe's second-largest player, behind Ikea, via a string of acquisitions including France's Conforama chain.

It is not now clear what "accounting irregularities" the company is referring to in its statement.

Jürgen Kolb, an analyst with Kepler Cheuvreux said in a note recently that Steinhoff's tax rate was "very unusual" and that any risk to the rate in future could hit the company's cashflow.

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