Tekkie Town fight drags down Star
The sneaker brand's CEO and chief operating officer resign, sending its share price down 4.6% to R16.57
Already struggling to distance itself from its scandal-ridden parent, Steinhoff Africa Retail (Star) is having to confront another crisis.
On Tuesday, Star’s wholly owned subsidiary Tekkie Town was thrown into turmoil after its CEO and chief operating officer walked out, after months of acrimony that saw Tekkie Town saying earlier in June it would sue Star over an earn-out agreement with Steinhoff.
Star’s share price ended Tuesday 4.61% lower at R16.57.
The new drama is another unwelcome distraction for Star’s management, who are struggling to contain the fallout from an accounting scandal at Steinhoff International, which wiped out more than 90% of the parent’s value.
That has also seen Star’s corporate governance questioned after it decided to set aside money to bail out executives whose incentive schemes were tied to Steinhoff’s share price.
Investors will question whether the ongoing hostility between Star and Tekkie Town founder Braam van Huyssteen could have been the reason behind much of what happened on Tuesday and whether it could have been avoided.
While Tekkie Town and the speciality fashion and footwear division in which it sits are relatively small in the context of Star’s overall financial performance, the developments will now require more of management’s time.
The group’s tumultuous Tuesday began with news that Tekkie Town CEO Bernard Mostert and chief operating officer Dawie van Niekerk had resigned with immediate effect the previous day, citing a campaign by the Star executive leadership to undermine them.
This appeared to have prompted a mass resignation among the company’s senior managers over the course of the past two days.
To make matters worse, Van Huyssteen, the founder of Tekkie Town, a discount footwear retailer with 368 outlets across SA, informed Business Day that he would be serving Star with an eviction notice to vacate the premises it occupies and rents from him by the end of July.
The campus in George, which Star pays nearly R500,000 a month to rent, comprises offices and a national distribution centre.
Star said it had deployed an interim management team to run Tekkie Town. It will be led by Riaan van Rooyen, the operational director at Ackermans.
"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. Tekkie Town will continue operating business as usual," Star said.
Van Huyssteen is still considering whether he will start a rival company, which he has previously referred to as "a Tekkie Town 2".