, NAIROBI, Kenya, Oct 14 – Uchumi Supermarkets Limited has announced the closure of its operations in Tanzania and Uganda in reorganisation exercise intended to stop financial haemorrhaging.
Uchumi CEO Julius Kipng’etich says the board has decided to close down the regional units in order to speed up the stabilisation of its Kenyan operations.
Kipng’etich says the two subsidiaries have not made any profit over the last five years, thus draining the parent operation.
“Our outlets in Uganda and Tanzania make up only 4.75 percent of our operations yet they account for over 25 percent of our operating costs,” explained Kipng’etich.
He said the retail chain has already informed the Capital Markets Authority (CMA) the Nairobi Securities Exchange (NSE) and other key stakeholders of the decision adding that in due course the retailer would seek shareholders’ approval for the implementation.
All stores in both markets are now closed and will be liquidated.
The retail chain will consider re-entering the markets at an appropriate time in the future once the parent business has stabilised.
“It is important that we get Kenya back to optimal operations and profitability by taking good care of our suppliers and creating value for our shareholders before reconsidering regional expansion,” added Kipng’etich.
He however clarified that Uchumi will not delist from the regional bourses.
“We are confident that we can now concentrate on turning around Uchumi by focusing on the 95 percent of the business that makes money for shareholders and are optimistic that we will achieve this within the shortest time possible,” he added.
Earlier, Uchumi had indicated that it will halt its growth plans after noting that the expansion was conducted without internal capacity or funding.
The retail chain had plans to open eight retail branches across East Africa in a bid to competitively and strategically position their business targeting entries into Rwanda and Burundi.
The new CEO maintains that he has to stabilise Uchumi within three months before moving to the next step.
The optimistic CEO assures that Kenyans should expect Uchumi to start recording growth in the next six months to one year.
Uchumi has already warned that its 2015 full year profits will decline by about 25 percent attributed to what the management termed as ‘challenges of working capital’.