South Africa's Steinhoff to double stores in eastern Europe in 5 years

By TJ Strydom JOHANNESBURG (Reuters) - Steinhoff plans to double its clothing stores in eastern Europe to 2,000 in the next five years, its chief executive said on Wednesday, extending the South African retailer's reach in one of its fastest-growing regions. The furniture company, which targets value-conscious shoppers, has been scooping up assets in Europe, where it makes the bulk of its profit to offset weakness in South Africa, where consumers are feeling the crunch from rapidly increasing energy costs, high levels of debt and rising interest rates. It recently splashed out $3.8 billion for U.S.-based Mattress Firm and another $800 million for Britain's Poundland following its failure to secure France's Darty PLC and Britain's Home Retail. Steinhoff's expansion into eastern Europe has been particularly rapid and profitable, with like-for-like sales growth in Poland, Slovakia, Czech Republic, Romania and Hungary up by a fifth in the third quarter. It has increased the number of stores to 1,000 from 14 around a decade ago, betting on growth as customers economize. "There is a lot of growth still to be achieved in eastern Europe," said Chief Executive Markus Jooste, adding that the company plans to double the number of its stores that sell clothes, footwear and cellphone airtime to 2,000 in five years. Steinhoff shares listed in Frankfurt were up 9.3 percent at 4.79 euros by 1151 GMT and 9 percent firmer in Johannesburg. The quarterly results did not include recent acquisitions of Poundland and Mattress Firm, which were completed in October, but Jooste said both performed well and that the Pep&Co footwear and clothing ranges it tried in Poundland exceeded sales expectations. The firm reported a 12.5 percent rise in operating profit to 327 million euros ($350.51 million) in the 3 months to end-September from 291 million euros a year earlier, buoyed by eastern Europe and South Africa. ($1 = 0.9333 euros) (Reporting by TJ Strydom. Editing by Jane Merriman and Louise Heavens)