, NAIROBI, Kenya, Jul 7 – Uchumi Supermarkets 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 retail chain will be relooking at the Tanzania and Ugandan markets which may result in closure of some stores but however will not exit the market as they believe in the opportunities available as well as its brand offering.
Speaking during an investors briefing on Tuesday the firm’s Board Member James Murigu, standing in for Chairperson Khadija Mire, said the firm had finalized a Sh500 million financing arrangement with Kenya Commercial Bank to pay outstanding supplier debts.
On supplies, Murigu admitted that the retail chain was still experiencing supply challenges citing that insiders had been supplying Uchumi and not giving value deals and as such, all staff with relations to any suppliers will be required to declare their relationship.
To finalize payment of its suppliers, the company plans to sell off its 20 acre Kasarani land, last valued at Sh2.2 billion. The firm has also hired KPMG for a forensic audit of the company’s finances as Ernest and Young audit the 2015 financial year numbers which will be out by end of July 2015.
“We have met a majority of our suppliers and the feedback has been very good. Uchumi is a strong Kenyan brand and we are committed to making it competitive again,” said Murigu.
The company has also revised internal procedures and is now currently able to track stock at an end of day basis. Currently, Uchumi is supplied through agents and middlemen but they intend to go directly to manufacturers and negotiate better deals.
Acting Chief Finance Officer, Sam Oduor, said following the exit of former managers the board plans to hire a new Chief Executive, CFO, Company Secretary and Human Resource Manager by October, 1, 2015.
Additionally, the board has been reconstructed and three new members incorporated.
Uchumi also plans to reinvest in its profitable stores while raising product offering to current market standards.
“Though we think the restructure is a positive move, we believe Uchumi will take a while to fully turnaround,” said Standard Investment Bank Research.
Uchumi, which is the only public-listed supermarket chain, has 37 stores in Kenya, Uganda and Tanzania.
In its 2014 full year performance, Uchumi recorded a 6.8 percent decline in pre-tax profit to Sh453 million from Sh486 million in 2013.