Steinhoff just grow'd, like Topsy

Steinhoff plans to double its clothing stores in eastern Europe to 2000 in the next five years, its CE said yesterday, extending the South African retailer's reach in one of its fastest-growing regions.

The furniture company, which targets value-conscious shoppers, has been scooping up assets in Europe, where it makes the bulk of its profit to offset weakness in South Africa, where consumers are feeling the crunch from rapidly increasing energy costs, high levels of debt and rising interest rates.

It recently splashed out $3.8-billion (about R52-billion) for US-based Mattress Firm and another $800-million for Britain's Poundland following its failure to secure France's Darty and Britain's Home Retail stores.

Steinhoff's expansion into eastern Europe has been particularly rapid and profitable, with like-for-like sales growth in Poland, Slovakia, Czech Republic, Romania and Hungary up by 20% in the third quarter.

It has increased the number of stores to 1000 from 14 a decade ago, betting on growth as customers economise.

"There is a lot of growth still to be achieved in eastern Europe," said CE Markus Jooste, adding that the company planned to double the number of its stores that sell clothes, footwear and cellphone airtime to 2000 in five years.

Steinhoff shares listed in Frankfurt were up 9.3% at à4.79 and 9% firmer in Johannesburg.

The quarterly results did not include recent acquisitions of Poundland and Mattress Firm, which were completed in October, but Jooste said both performed well and that the Pep&Co footwear and clothing ranges it tried in Poundland exceeded sales expectations.

The firm reported a 12.5% rise in operating profit to à327-million in the three months to end-September from à291-million a year earlier, buoyed by eastern Europe and South Africa.

But Jooste added Steinhoff was not looking at merger and acquisition deals in South America.

He was responding to a question about a possible acquisition of appliance maker Via Varejo in Brazil.

"We are not looking at anything in South America," Jooste said during a call with analysts after releasing fourth-quarter results.

Shares in Via Varejo SA soared last month on reports that three suitors, Steinhoff among them, had expressed interest in a controlling stake in the company.