Steinhoff: The Ikea of Africa?

By Matthew Davies
Africa Business Report editor, Johannesburg

image copyrightSteinhoff
image captionHardware Warehouse is among the brands Steinhoff owns in South Africa

Although headquartered in South Africa, the origins of Steinhoff go back to West Germany during the Cold War.

In 1964, Bruno Steinhoff seized on an opportunity to import cheap furniture made in what was then East Germany and sell it in the more cash-rich West. When the Berlin Wall came down in 1989, he was able to buy up the factories in East Germany that were supplying the furniture.

At the same time, his friend, Claas Daun, was busy making a business out of turning around companies that had serious problems. Mr Daun, a tax lawyer by training, had had some dealings in South Africa, starting in 1993, when he bought the troubled South African retailer, Victoria Lewis.

Working alongside Mr Daun, as his chief executive, was a young chartered accountant named Markus Jooste. It was Mr Jooste who convinced Mr Daun to merge his South African assets with Mr Steinhoff's business interests in Europe in 1998.

image copyrightSteinhoff
image captionBruno Steinhoff founded Steinhoff Group from a furniture manufacturer in Germany

A few months later the new entity acquired the furniture maker, Pat Cornick. It was the first of many acquisitions which have swelled the company into the business it is today.

Steinhoff in a nutshell

  • Headquartered in South Africa from German origins
  • Founded in 1964 by Bruno Steinhoff
  • 6,500 retail outlets in 30 countries
  • 22 manufacturing facilities
  • 40 retail brands, including Bensons for Beds and Harveys in the UK, Conforama in Europe, Pep, Ackermans and Hardware Warehouse in South Africa and Snooze in Australia
  • Also has property and automotive assets
image copyrightSteinhoff
image captionConforama is one of the largest home furnishings retail chains in Europe

What really cemented Steinhoff as a major player in global retail was the 2011 acquisition of the French homeware retailer, Conforama. This brought six new countries under the group's umbrella.

Once thought of as the "Ikea of Africa", nowadays the group trades in homeware and general merchandise in Europe, Australia, Africa (especially South Africa) and the United Kingdom.

It has been involved in two high-profile takeover battles in Europe - both of which it ultimately lost. In the UK, it tried to outbid Sainsbury's for Argos owner Home Retail Group. Shortly after that failed, Steinhoff put in a bid for the French electronics retailer Darty - losing out in the end to French books and music store Fnac.

image copyrightBensons
image captionSteinhoff owns Bensons for Beds in the UK

In addition to this, Steinhoff International counts the South African franchise of the car rental company Hertz in its stable, as well as a host of real estate properties across the world.

Markus Joost, a keen racehorse owner, owns about 3% of the company and is said to be worth in the region of $700m (£530m). One of the major shareholders in Steinhoff is Christo Weise, the South African retail billionaire ranked by Forbes as the second-richest man in Africa.

The group now has 6,500 outlets in 30 countries, 22 manufacturing facilities and 40 retail brands, including Bensons for Beds and Harveys in the UK, Conforama in Europe, Pep and Ackermans in South Africa and Snooze in Australia. Steinhoff derives about 60% of its earnings in Europe and 34% in Africa.

In an effort to fund its continuing expansion plans in Europe, the company moved its primary stock market listing from Johannesburg to Frankfurt in December last year.

Steinhoff's relentless expansion by acquisitions has provided a solid basis for profit growth as well. In its latest set of results, operating profit had jumped 46% to €1.1bn (£916m; $1.2bn) in the nine months to March, compared with the same period the year before.

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