Steinhoff International Holdings reduced its loss by 70% in the fiscal year ended in September, the South African retailer’s first step toward recovering from an accounting scandal.
The net loss was €1.2-billion during the period, down from €4-billion in the previous year. The owner of Conforama in France and Mattress Firm in the US was reporting its second set of full-year audited earnings in as many months following revisions to the company’s finances in the wake of the late-2017 crisis.
Steinhoff’s assets were valued at €16.4-billion as of end September, compared with €17.5-billion the previous year, the company said in a presentation on its website. The retailer had previously made 15.3 billion euros of writedowns because of accounting irregularities, as former management led by former CEO Markus Jooste oversaw a series of related-party transactions that inflated profit and asset values.
The shares rose 3.4% to €0.09 on Tuesday in Frankfurt, where Steinhoff retains a primary listing, before the results were released. That’s still 97% below pre-crisis levels.
In Steinhoff’s financial statement for the year through September 2017, released in early May, auditors at Deloitte made clear that the company’s ability to operate as a going concern was in doubt. That’s because of numerous law suits and regulator probes, while a long-awaited debt restructuring has yet to be finalized. The auditors didn’t express an opinion over the 2018 numbers either.
No individual has yet been charged for his or her role in Steinhoff’s near collapse, including Jooste.
Steinhoff faces a string of claims and its legal woes deepened in May when a Frankfurt court received ten suits to be included in a mass German investor case. That’s on top of €6.2-billion of claims highlighted by the group in its 2017 annual report.
“While we still have a long way to go, including resolving the various legal proceedings that have been initiated against the company, progress is being made,” Steinhoff said. “Notwithstanding the significant difficulties the group faced over the period, at operating company level a number of key subsidiaries continued to report solid performances.”
The firm reiterated that sales in the 2019 fiscal year are expected to drop because of asset disposals, more competition and a weak trading environment. Operating expenses will remain under pressure and financing costs will increase, the firm said, adding that it could “experience an adverse impact” on its results.