The relationship between the management of Steinhoff Retail Limited (Star) and discount retailer Tekkie Town has broken down irretrievably, resulting in the walkout last night of Tekkie Town CEO, Bernard Mostert; the COO, Dawie van Niekerk, CIO Willem Wait and chief procurement officer, Mike Brown. Their departure precipitated the resignations of a number of other top managers and 100 staff.
This follows the resignation of Tekkie Town founder Braam van Huyssteen from his role as chairman of Star’s Property division in late May. He was subsequently removed from his position as chairman of the Speciality Fashion and Footwear division by the Star executive.
“It was not easy to walk away from the people, but I could not stay in a place where the values do not match your own,” says Mostert. “I must be clear, this is not a strategy. We are not coercing people to leave. But for us, as senior management, we were exposed to this ludicrous fight between Braam and the senior executives of Star, which has become vindictive and personal. We could not do it any longer.”
He says that he, along with other executives, will sue Star for constructive dismissal.
Star issued a short statement acknowledging the resignations, which took place with immediate effect. An interim management team led by Riaan van Rooyen (currently the operational director at Ackermans) has been deployed. “Tekkie Town is an important part of Star, and further support will be provided to Tekkie Town, as required, through Star’s extensive operational capability,” the statement says.
The battle between the Tekkie Town founder and Star follows the implosion of Steinhoff and collapse in its share price last December, which left the Tekkie Town vendors – along with thousands of other shareholders – holding paper that is now virtually worthless. Steinhoff acquired Tekkie Town in February 2017 and Van Huyssteen is pursuing several avenues in a bid to have the acquisition of Tekkie Town by Steinhoff cancelled and reversed.
He has also said that he may open a rival to Tekkie Town.
In the latest twist in the story, Van Huyssteen has issued eviction notices to Tekkie Town in George, Shoe City in Somerset West and Tekkie Town in Cape Town.
The inevitable disruption that this walkout will bring to the business does not bode well. The acquisition of Tekkie Town and BSG added welcome scale to Star’s Speciality division, swelling operating profit margin from 2.3% in the six-month comparative period to 6.1% in the six months to March 2018.
Tekkie Town operates 368 stores within Star’s total retail footprint of more than 5 100 stores and contributes about 3% to Star’s consolidated annual revenue.