Uchumi CEO unveils raft of turnaround plans

KENYA – Uchumi Supermarkets will reopen its stores in Kenya and fully restock them by the first quarter of 2016 while its Ugandan and Tanzanian businesses could be considered for a strategic partnership as the regional retail chain seeks to turn around its performance.

KENYA – Uchumi Supermarkets will reopen its stores in Kenya and fully restock them by the first quarter of 2016 while its Ugandan and Tanzanian businesses could be considered for a strategic partnership as the regional retail chain seeks to turn around its performance.

In Kenya, Uchumi will also use technology to reach a wider market and open smaller stores, chief executive officer Dr Julius Kipng’etich said.

The technology strategy will ride on the penetration of smartphones in East Africa as Uchumi struggles to attract volumes and boost performance after the once-leading retail chain closed down operations in Uganda and Tanzania and shut two branches in Kenya.

Uchumi has 2,400 members of staff in Kenya, having laid off 1,231, and some 746 employees in Uganda and Tanzania.

In October, Uchumi announced it had closed down six outlets in Tanzania and five in Uganda while Kenya saw two outlets shut.

This saw the fourth-largest Kenyan retail chain post an after-tax loss of Ksh3.4 billion ($33 million) in the year to June following a decline in revenues.

However, more employees are being recruited in Kenya in anticipation of the December holidays and the back-to-school season in January and February. The Kenyan business accounts for 95 per cent of Uchumi’s portfolio.

Focus is on Kenya

“The focus now is on Kenya’s recovery, with the target being the youth,” said Dr Kipng’etich.

“We want to consider having local partners in Uganda and Tanzania but, meanwhile, we are liquidating assets and settling debts.”

The partnership in Uganda and Tanzania could involve selling shelves to manufacturers or selling a stake to local investors, Dr Kipngetich told The EastAfrican.

He would, however, not divulge the value of the assets despite the two subsidiaries reported as gobbling up more than 25 per cent of the group’s operating costs.

In Tanzania, the liquidation process to raise money for salary, rent and supplies arrears is ongoing while a liquidator for the Ugandan shop was appointed last week.

Whereas its debts in Kenya have been quoted as hitting Ksh1.8 billion ($17.6 million), it was not clear how much the retailer owes in Uganda and Tanzania. In Uganda, former employees are in court to demand terminal benefits of up to $61,274 (Ush203 million) while in Tanzania the retailer is said to owe suppliers and landlords $91,176 (Tsh190 million).

December 9, 2015; http://www.theeastafrican.co.ke/business/Uchumi-s-new-CEO-unveils-raft-of-turnaround-plans/-/2560/2985214/-/jekalx/-/index.html

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