Economy

Statement Vows Business as Normal

The owner of retailer Harris Scarfe and several furniture brands has moved to assure the public its Asia Pacific business is not in distress despite its parent company being downgraded deeper into junk status.

Ratings agency Moody’s has downgraded South African retail giant Steinhoff deeper into junk territory, due to mounting cash flow problems.

The company owns household goods and merchandise stores in Europe, the United States, Africa and Australia.

Its Asia Pacific group owns Harris Scarfe, Freedom Furniture, Fantastic Furniture, Snooze and Best & Less, and employs about 10,000 people.

Parent company Steinhoff International is fighting for survival after the revelation of accounting irregularities wiped more than $12 billion from its market value, and saw its CEO Markus Jooste quit.

Steinhoff Asia Pacific released a statement that said its Australian business was trading normally.

“The Steinhoff Asia Pacific business is an independent, profitable and financially strong business delivering positive cash flows,” group CEO Michael Ford said.

“The business has its own banking facilities here in Australia. Steinhoff Asia Pacific is not party to any of the banking facilities of its parent company Steinhoff International Holdings.”

Steinhoff Asia Pacific has appointed legal firm Minter Ellison and business advisors Ferrier Hodgson, saying it is “a prudent step by Australian management where its parent company is working through significant uncertainty”.

The company said its total sales across Australia and New Zealand were up 3.1 per cent in the past year and it was currently in its peak trading period, with strong sales across all its brands.

Harris Scarfe is one of Adelaide’s oldest brands, opening in 1850 in Hindley Street in the city as an ironmongery wholesaler.

After trading for more than a century, its future looked uncertain in 2001 as it went into receivership amid accounting issues that led to criminal charges and jail terms for some executives.

It was rescued from receivership by a private consortium, then in 2007 private equity firm Momentum gained a controlling share, and Myer bought 20 per cent.

In 2012 Momentum sold the business to South African private equity firm Pepkor, then two years later it fell into Steinhoff’s ownership when the company bought Pepkor in a $6.7 billion deal.

Harris Scarfe has 55 stores across South Australia, Victoria, Tasmania, New South Wales, the ACT and Queensland.

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