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Steinhoff looks to sell off assets after $7 billion accounting fraud

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Steinhoff looks to sell off assets after $7 billion accounting fraud
Steinhoff Chief Executive Officer Louis du Preez addresses a presentation to investors in Cape Town, South Africa, August 13, 2019. REUTERS/Mike Hutchings   -   Copyright  MIKE HUTCHINGS(Reuters)
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CAPETOWN (Reuters) – Scandal-hit South African retailer Steinhoff <SNHJ.J> said on Tuesday its only hope for survival is to sell off assets to become a retail-focused investment holding firm, as it fights to contain the fallout of a $7 billion (£5.8 billion) accounting fraud.

The company has been making losses of up to $4 billion a year since it initially flagged holes in its accounts in December 2017.

In its first presentation to investors since then, the retailer’s chief executive Louis du Preez said its “only way to survive” was to slim down into a pure investment holding company focused on retail.

To achieve that Steinhoff is looking to sell off its non-retail assets and cut jobs at its French retail chain Conforma, its management said during the presentation.

The accounting scandal at Steinhoff shocked investors that had backed its transformation from a small South African furniture outfit into a discount furniture retailer straddling four continents.

Executives said its fallout means the company, which owns Mattress Firm Inc in the United States and Fantastic chains in Australia, and is also listed in Frankfurt <SNHG.DE>, will be fighting to return to profitability for years to come even with strong turnover.

CEO du Preez also said Steinhoff’s debt – totalling over 9 billion euros (£8.36 billion or $10.09 billion) – was too high and needed to be urgently addressed.

(Reporting by Wendell Roelf; writing by Emma Rumney; editing by Jason Neely and Jan Harvey)

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