Steinhoff's Revenue Hit By Store Closures Over Coronavirus Fears
South African retailer Steinhoff has said that its turnover has fallen, particularly in general merchandise, as a result of the partial or full closure of stores in a number of European markets due to restrictions on movement.
A number of countries have imposed travel bans and restrictions on movement and public gatherings in order to contain the global spread of the coronavirus.
Steinhoff's general retail stores in France, Spain, Poland and the Czech Republic are affected, Steinhoff's statement said, adding that the decline will last as long as the restrictions.
The performance of its fast-moving consumer goods business has been more resilient, it added.
Steinhoff's European stores fall under the Pepco Group, which owns retail brands PEPCO, Poundland and Dealz.
"The extent and duration of the current restrictions on trade remain uncertain and it is too early to determine the exact impact of the pandemic on the performance of the group for the 2020 financial year," Steinhoff, which also operates in Australia, said.
"It is clear, however, that the virus outbreak and resulting restrictions will have a negative impact on overall turnover and the underlying business performance during this period."
The immediate actions that management of Steinhoff's companies is taking to address the impacts of the virus include reducing operating expenditures, reducing stock of goods impacted by the trading restrictions and stopping all but essential capital expenditure, it said.
Management is also making use of tax payments and other government relief measures where available and taking actions to optimise working capital, in order to "protect profitability and cashflow."
At the beginning of the outbreak in February, Steinhoff's attention was focused on efforts to mitigate disruption in the supply chain, but as the outbreak has progressed, "the most significant impacts on the group have switched from those with a supply chain focus to those with a demand-side impact."
Many of the businesses in Steinhoff source products from Asia. The retailer has benefited from its "well-diversified and flexible" supply chain, which allowed it to address and mitigate supply issues, it said.