NAIROBI: Kenya’s Uchumi supermarket is to close its loss-making Tanzanian and Ugandan businesses as part of a turnaround plan to try to return to profit growth. CEO Julius Kipng’etich said last month Uchumi would reorganise the management of underperforming branches or could close or relocate the worst performers.
“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,” Kipng’etich said on Wednesday. “The two subsidiaries have not made any profit over the last five years, which means they have been draining the parent operations.”
Uchumi is facing competition in Kenya from domestic supermarkets such as Nakumatt as well as international retailers such as France’s Carrefour, which has plans to open stores. Kipng’etich, a former chief operating officer of Equity Bank , took up his post at Uchumi in August to help revive chain after it had fired its previous head.
He said all its stores in Tanzania and Uganda would be wound down and said Uchumi would consider re-entering the two markets in future once the Kenyan operation stabilised. Kipng’etich said Uchumi would retain cross-listings in Uganda and Tanzania and that it had informed the Kenya Capital Markets Authority and the Nairobi Securities Exchange of its action. It will seek shareholder approval at a later date.
“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 said. Before the closures in Tanzania and Uganda, plus two outlets in Kenya, Uchumi had a total of 37 branches.
It made a pretax loss of 262 million shillings ($2.54 million) for the half year to Dec. 31. t said in August its full-year earnings were expected to fall by at least 25 percent from the previous year. ($1 = 103.2000 Kenyan shillings) (Reporting by George Obulutsa. Editing by Jane Merriman)
