JOHANNESBURG — Somebody should probably script a movie around the fallout that’s happening around Steinhoff, and particularly the feud involving Tekkie Town. It’s clear that both parties in this dispute think that they’re right and neither is willing to budge. The subsequent drama is actually pretty incredible, and the lengths that parties are going to in order to throw dirt on each other is quite amazing. But what’s concerning in all of this is that this drama is happening during a recession, and there’s no doubt going to be a massive drop in productivity at Tekkie Town. Amid this backdrop, it will be interesting to see if this popular shoe business still manages to survive… – Gareth van Zyl
(Bloomberg) — Steinhoff International Holdings NV’s Africa retail business filed a court order against former executives at South African shoe retailer Tekkie Town to prevent them setting up a rival operation, the latest development in a bitter dispute.
Pepkor Holdings Ltd., formerly known as Steinhoff Africa Retail Ltd., wants restraint of trade provisions against five previous employees including Braam van Huyssteen, Bernard Mostert and Michael Brown, according to a Tuesday statement. Steinhoff bought Tekkie Town in 2016, and the chain became part of Steinhoff Africa when the latter was spun off about a year ago.
Founder Van Huyssteen was initially kept on at the chain, but the relationship turned sour when Steinhoff announced accounting irregularities in December that wiped 95 percent off the share price. About 100 Tekkie Town staff walked out in June after Van Huyssteen brought a claim against Pepkor related to an earn-out agreement he said he had with its parent, while the founder also sought to evict the company from offices in the coastal city of George, where Tekkie Town is based.
Documents supporting the court application accuse the former employees of attempting to drive down the share price of Pepkor and buy back Tekkie Town, which has about 381 shoe stores. If that failed, an alternative plan was to start a business in direct competition with the shoe retailer. Van Huyssteen has previously said that he planned to start a business called Mr Tekkie.
The ex-Tekkie Town executives will hand in their responding affidavit by Friday, van Huyssteen said by phone. “We are prepared to defend our case.” A criminal case has been opened against Pepkor for using the shoe chain’s offices, he added.
Pepkor’s shares fell 2.5 percent to 16.77 rand as of 11:10 a.m. in Johannesburg, bringing its decline since mid-June to 9.4 percent. The stock has lost 34 percent since Steinhoff announced accounting irregularities.