The UK is arguably the most difficult retail furniture market in the world right now. The English economy contracted faster in the last quarter (ending March) than it has done in 40 years, leaving a trail of empty retail space and liquidated companies in its wake.

In this environment JSE-listed furniture and manufacturing company Steinhoff is taking market share and maintaining margins - important for a company that earns 70% of its revenues offshore. "Our margins might be lower than our competitors', but two years ago these were loss-making businesses," says spokesman Mariza Nel.

Steinhoff brand Harvey's and competitors DFS and Ikea are now the biggest furniture retailers in the UK market. "Each operates in a distinct market," says Nedcor Securities analyst Syd Vianello. "So they don't need to take each other on."

That Steinhoff is faring well in this economic climate seems a mixture of clever strategy and luck. Fortuitous timing resulted in the UK business restructuring before the markets crashed.

In Europe it added retail to its manufacturing operations. "By supplying their retailers with more of their own product, they are protecting themselves from the weakness of other third party customers," says Vianello.

The company's Poco joint venture in Germany is targeted at the "value" end of the furniture market and last year it turned over about R10bn.

Steinhoff is exploiting the spare capacity in China brought on by the drop in global demand. "We pass these savings on to our customers," says Nel. Even in Australia where the company is focused on the upper end of the market, it is making profits.

In SA the business has different stories to tell. The Unitrans retail division, which last year reported operating profit up 5% to R489m, is expected to fare badly. Similarly, the PG Bison business is feeling some pain as the building industry worsens. But Penny Pinchers and Timbercity - again in the "value" segment - are growing volumes and expanding their footprint.

Steinhoff Logistics is well placed to win business from the struggling Super Group. Since the company walked away from its acquisition of the JD Group, its appetite to enter the retail furniture industry has cooled. "We will take market share where our competitors go into liquidation. It will get worse before it gets better, and those that survive will grow fast," says Nel.

The acquisition spree of the past five years means the firm is sitting with 39% net debt. The first instalment is due in July 2010. Though it can afford to pay this down - cashflow is €2bn for the year and capex is limited to maintenance - it may refinance the debt.

Despite the carnage in certain of its markets, Steinhoff' should fare relatively well this year and better next year, says Vianello. Revenues for 2008 were R12,42bn.

If management honours its promises - a good set of results, as analysts are predicting - in June, it's possible the market will reward it with a re-rating - a prize it's been waiting for.