Uchumi shuts Uganda outlet, profit up 7.6pc

UGANDARetail chain Uchumi Supermarkets has closed down one of its branches in Uganda, as the retailer announced a 7.6 per cent growth in its 2014 after-tax earnings helped by a tax credit.

Uchumi said on Monday that the Uganda closure was due to its poor location and disagreement with landlord over certain improvements on the premises.

Chief executive officer Jonathan Ciano in an interview yesterday identified the closed branch as Kampala’s Freedom City Mall outlet.

Uchumi’s after-tax profit for the full-year ended June 30 rose to Sh384 million from Sh357 million last year. Total net sales increased one per cent to Sh14.45 billion from Sh14.36 billion in 2013, with gross profit falling 6.8 per cent to Sh453 million from Sh486 million.

Mr Ciano said Uchumi has been operating six outlets in Uganda and the 110 employees at the affected outlet have been moved to other branches.

“The location was not a prime area for doing business. Initially we thought it could be since few players operated in the area. But after numerous variations on the performance of the branch, we decided to pull out but this does not mean that we are reducing our presence in Uganda,” said Mr Ciano.

“Other (possibilities) included reducing the outlet from 5,000 square feet to 3,000 but the landlord became non-responsive and we had to leave,’’ said Ciano.

He said the company has already identified a new location where the former outlet will be relocated to as part of a wider plan to increase its footprint in Uganda.

“We have identified new location to set up our sixth branch. The new outlet is expected to employ 70 employees and will start operations by November this year. The building is nearly complete.”

Other established retailers in Uganda include South Africa’s Shoprite, Nakumatt, Embassy Supermarket, Garden City Shopping and Leisure Centre. Regional Retailer Nakumatt is said to be in talks with Shoprite to acquire its three outlets.

Mr Ciano said plans are under way to open two branches in Moshi and Arusha by the end of the December. The retailer, which already has four branches in Tanzania, cross-listed on the Dar es Salaam bourse on August 15.

The listing was aimed at increasing Uchumi’s regional outlook and boost its rights issue plans that is slated for November. Uchumi is already cross-listed on the Uganda Securities Exchange (USE) and on the Rwanda bourse including Nairobi Securities Exchange.

September 9, 2014; http://www.businessdailyafrica.com/Corporate-News/Uchumi-shuts-Uganda-outlet–profit-up-7-6pc/-/539550/2445752/-/11jg1uez/-/index.html

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