Steinhoff, the parent group of the Dealz and Poundland discount stores, will have to restate its 2015 accounts and maybe earlier figures, the South African retailer has said, having already warned on its 2016 numbers.
The owner of more than 40 retail brands including Conforama, Mattress Firm and Poundland is fighting for survival after flagging accounting irregularities last month and parting ways with its veteran chief executive, Markus Jooste.
In Ireland, the Steinhoff group is best known for its Dealz and Poundland stores.
In the Republic, it the Steinhoff group owns about 60 stores under the Dealz name, and had plans to open many more. In the North, it operates as Poundland.
A review being carried out by accounting firm PwC now suggests that “accounting irregularities” may stretch beyond 2015, it said.
The company last month postponed its 2017 results until the investigation is over. Steinhoff said the timeline for the completion of the investigation remained uncertain. It had reported a €1.4bn net profit in 2016 while its 2015 accounts showed earnings of €959m, according to Steinhoff’s annual reports.
“The latest information confirms what we’ve suspected all along (about the reliability of the results for 2015 and beyond),” one hedge fund manager said, declining to be named. “What we’re eagerly waiting for is the outcome of the PwC investigation,” the fund manager said.
The accounting scandal marks a fall from grace for the retailer which has grown rapidly through a buying spree that began in 2011 with the acquisition of Conforama, Europe’s second-biggest furniture retailer.
It has also tainted the reputation of Steinhoff’s chairman and biggest shareholder Christo Wiese, considered one of South Africa’s most respected stewards of shareholder capital.
Shares in Steinhoff, once dubbed Africa’s Ikea, have fallen around 90% since news of the accounting irregularities broke in early December, wiping 185bn rand (€12.5bn) off its market value. Its shares, which also trade in Frankfurt, rose about 7% in the latest session, valuing the retail group at €1.43bn.
It warned then that there was a €2bn hole in its balance sheet and has since said that some credit facilities have been suspended or withdrawn as it grapples with more than €10bn in outstanding debt.
Separately, the company has been under investigation for suspected accounting fraud in Germany since 2015.
Four current and former managers are under suspicion of having overstated revenue at subsidiaries, prosecutors said.
Steinhoff has said the German investigation relates to whether revenue was booked properly, and whether taxable profits were correctly declared.
Reuters and Irish Examiner