In the biggest retail accounting scandal since Tesco, Steinhoff’s share price has more than halved and group chief executive Markus Jooste has resigned as a probe into accounting irregularities has begun.
It has also delayed the publication of unaudited accounts for its financial year 2016/17 which was scheduled for yesterday.
While Steinhoff has stated that new information emerged within the last 48 hours – Steinhoff confirmed on 4 December that its unaudited accounts would be released on 6 December – this is not the first time concerns about Steinhoff’s accounts have been raised.
German authorities have been running investigations into the group since 2015, regarding the amount of corporate tax it pays.
It also received a petition to appear before the Enterprise Chamber of the Amsterdam Court of Appeal in September 2017 about its 2015/16 audited accounts.
Irrespective of the breadth and depth of these irregularities, Steinhoff faces a long road ahead to win back investor trust.
The Steinhoff group is entering a period of flux, as it looks for a new CEO, with Christo Weiss, who owns 23 percent of Steinhoff, being appointed as the interim chief executive, and braces itself for investor reaction to the probe’s findings.
The company said that its financial accounts would be published “when it is in a position to do so”.
Should those findings be as damaging as some investors fear, there is the possibility that the group, which is an opaque collection of subsidiaries covering 40 different brands, could be broken up.
Investigations are centred on the treatment of intercompany transactions, and there is no suggestion that the sales or profitability of its UK retailers – Poundland, Harveys and Bensons for Beds – have been inflated, but the fallout from the inquiry could end with them being put up for sale.