Poundland Buyer Warns Over Sterling Slump
Steinhoff says that its UK businesses including Bensons for Beds could suffer from an "adverse effect on future margin".
Wednesday 31 August 2016 13:14, UK
The South African retail giant taking over Poundland has warned it faces a squeeze on profits after the fall in sterling.
Steinhoff, which already owns Bensons for Beds and furniture retailer Harveys in the UK, said the slump in the pound after the Brexit vote could have "an adverse effect on future margin".
That is because the British businesses will be exposed to higher prices of products that they source in dollars and other currencies.
However Steinhoff said they would be protected "to some degree" against prolonged weakness in the pound because their bedding and upholstery goods are made in Britain.
Sterling has fallen more than 10% against the US dollar since the referendum on 23 June.
The group said its results, reported in euros, will suffer an "unfavourable effect" when income from the UK is translated because it will be lower.
Steinhoff also pointed to the Brexit decision creating uncertainty in the business community and financial markets, while also possibly weighing on consumer demand.
The group issued the warning as it reported a 33% rise in sales to €13.1bn (£11.1bn) for the year to the end of June, thanks to its European businesses.
Operating profits rose 32% to €1.5bn (£1.2bn).
Steinhoff, backed by South African retail billionaire Christo Wiese, is .
It recently lost out in a battle with Sainsbury's to buy Argos owner Home Retail Group.
Mr Wiese's Brait investment group owns controlling stakes in Virgin Active, New Look and Iceland.