Steinhoff shares fall 61% on opening after CEO resigns amid ‘irregularities’

Shares in Steinhoff International Holdings NV fell as much 61% at opening on the JSE on Wednesday following the resignation of the company’s CEO amid accounting irregularities.

Shares in the company dropped to R17.56, a loss of R28.09 or 61.53%, shortly after the exchange opened.

Steinhoff was due to publish financial results on Wednesday, however that has been postponed because of accounting irregularities. Fund manager at Ashburton Investments, Wayne McCurrie said in a note on social media: “The effect must be material and can be a serious drag on the company and its reputation for years”.

Chief executive officer Marcus Jooste resigned with immediate effect on Wednesday after the global furniture and clothing retailer reported irregularities in its accounts that require further investigation.

The owner of the France-based Conforama furniture store chain and Pep clothing stores in Africa has appointed auditor PwC to probe the matter, it said in a statement on Tuesday.

“Steinhoff will update the market as the aforesaid investigation proceeds. The Company will publish the audited 2017 consolidated financial statements when it is in a position to do so. In addition, the Company will determine whether any prior years’ financial statements will need to be restated,” it said.

South African billionaire and chairman of the company, Christo Wiese, will run the company on a temporary basis.

The retailer, which has origins in South Africa, has a base in Amsterdam and a primary listing in Frankfurt, said Monday it wasn’t able to release audited full-year financial results on Wednesday due to matters related to a criminal and tax investigation in Germany.

It had previously rejected allegations made in a Manager-Magazin report that Jooste is among employees being investigated by German prosecutors in a 2015 case linked to possible accounting fraud.

Steinhoff shares had previously slumped 18% on Monday and Tuesday. The company has transformed itself in the past four years from a mostly African-focused retailer to an acquisitive powerhouse that now owns Mattress Firm in the US and Poundland in the UK.

Wiese is South Africa’s fourth-richest person with a net worth of $4.3 billion, according to the Bloomberg Billionaires Index.

PSG Financial Services advised shareholders on Wednesday that its board of directors received and accepted the resignation of Jooste as a non-executive director of PSG Group and PSG Financial Services, with immediate effect.

“He will be replaced by his alternate director, Mr Theodore de Klerk, who has been appointed as a non-executive director to the boards of PSG Group and PSG Financial Services with immediate effect,” it said.

Read: Steinhoff CEO resigns over global retail accounting failures

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Steinhoff shares fall 61% on opening after CEO resigns amid ‘irregularities’