GEORGE NEWS - Tekkie Town CEO Bernard Mostert says he did not expect 100 employees from the head office in Saagmeul Street to follow him and the other managers on their way out of the premises.
In a resignation message to employees on Tuesday 26 June, Mostert and COO Dawie van Niekerk wrote that it was not an easy decision and it left them "heartsore".
On Wednesday morning, 27 June, Mostert told George Herald that he felt a sense of relief, because he could not continue "in the manner that things were going after the takeover".
"After the past seven months, I have absolute no doubt that this was the right decision," said Mostert. "We cannot work at a place where we are undermined and our business is not allowed to be managed to deliver the best results. Tekkie Town is the most profitable in the Star group, but when Braam began applying the same money management principles in the other businesses in Star, it was met with opposition. The people did not like Braam's aggressive manner of bringing down costs. If you are overweight and you go on a diet, it is initially difficult, but at the end of the day you are fitter and you live longer. This was what we were busy achieving. For Braam every rand counts and this was where he came head to head with the other businesses' managements.
A charge sheet was drawn against Braam because he managed to lower the rental of two loss-making shops. If you get into trouble over something like that, it is ludicrous. They also did not want to allow us to use Tekkie Town's local insurance broker who has given us excellent service. We were forced to join Star's group insurance that was significantly more expensive and could not match our broker's quote. I cannot accept costs that do not make financial sense."
The eviction notice from Van Huyssteen, who owns the Tekkie Town head-office complex, will be valid as from end July.
He said the R100-million trust fund started for Tekkie Town employees will be used to support the employees who resigned. "We will be paying them from the fund precisely what they were getting while at Tekkie Town. We are not employing them; we are simply distributing money to them that was set aside for an unlikely crisis. We are taking three months off, but will keep those who have followed us fit and ready. It is actually nice to spend some social time together."
They have not decided yet about starting Tekkie Town 2, as was hinted by Van Huyssteen recently. "But whatever we do next, it will be from George. Our plan for now is to take time off while the legal proceedings go ahead. There is Braam's claim against Steinhoff, the bonus agreement case according to which the results we would have achieved over three years would have brought a payout of R1-billion to all Tekkie Town employees, and then there is my constructive dismissal case, as well as those of Dawie and Braam."
An anonymous employee who resigned said, "What they did to the leaders of our business is just not right. I cannot work like this. Braam has brought us to where we are now, we cannot go on without him. We are like a family."
Star declined to respond to George Herald's questions, but confirmed the deployment of an interim management team and said that Tekkie Town will do business as usual.
The human resources manager at the Tekkie Town head office did not respond to a message left for her.
The article below was published on Moneyweb on Tuesday:
Tekkie Town executives walk out
The relationship between the management of Steinhoff Retail Limited (Star) and discount retailer Tekkie Town has broken down irretrievably, resulting in the walkout Tuesday 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.
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