Shares in Sleepy's Owner Steinhoff Fall 60% on Accounting Probe

Steinhoff tanks 57% as CEO leaves amid accounting probe

Steinhoff tanks 57% as CEO leaves amid accounting probe

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.

Steinhoff bought the Willenhall-based chain of discount stores for £610 million previous year.

Shares in Steinhoff International plummeted by as much as 68% in Frankfurt after its CEO resigned and the company said it was investigating accounting irregularities.

"The supervisory board, in consultation with the statutory auditors of the company, has approached PwC to perform an independent investigation".

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Shares in the company plunged more than 60% on Wednesday after it disclosed Markus Jooste's departure in a statement, more than halving the value of a company that had been worth more than $14 billion the day before.

While the company has been under investigation for suspected accounting irregularities by a state prosecutor in Germany since 2015, it is not clear if these are the accounting irregularities the company was referring to in its statement. "Shareholders and other investors in Steinhoff are advised to exercise caution when dealing in the securities of the Group".

Steinhoff's chairman, retail tycoon Christo Wiese, alongside former Pepkor CEO Pieter Erasmus, will run Steinhoff until a new CEO is appointed, a statement issued at 10.45pm on Tuesday night said.

The group holds 6,500 retail outlets and 40 brands worldwide, including Bensons for Beds and Harveys in the UK. Steinhoff derives about 60% of its earnings in Europe and 34% in Africa.

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But in its announcement on Tuesday, it said: "The Supervisory Board wishes to reassure shareholders that Steinhoff has a number of high quality profitable businesses around the world".

Steinhoff said it will update the market as the investigation proceeds and added that it will publish its audited 2017 consolidated financial statements "when it is in a position to do so".

Jürgen Kolb, an analyst with Kepler Cheuvreux said in a note recently that Steinhoff's tax rate was "very unusual" and that any risk to the rate in future could hit the company's cashflow.

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