Uchumi posts H1 profit fall as insecurity hits retail
28 February 2014, 15:33
Nairobi - Uchumi Supermarkets Ltd posted on Friday a 19 percent drop in pretax profit in its first half, hit by a fall in sales which it blamed on rising inflation and a deadly Somali militant attack on Westgate shopping mall.
The firm, Kenya's second-largest retail chain with stores in neighbouring Uganda and Tanzania, said profit before taxes fell to 106.9 million shillings in the six months ended December.
Net sales slipped to 7.29 billion shillings from 7.59 billion shillings the previous year.
"In the first half of the 2013/14 financial year, east African economies performed below expectation," the company said in a statement.
It said lower-than-expected government spending hurt private sector spending, while rising inflation in Kenya, the region's biggest economy, placed a strain on disposable income.
"Insecurity in Uganda and Kenya continued to impact negatively on retail business following terrorist threats and actions during the period," Uchumi said.
Al Qaeda-linked militants attacked an upscale shopping mall in the Kenyan capital in September, killing at least 67 people in an assault that struck a high profile symbol of Kenya's economic growth. Uchumi did not have an outlet in the Westgate mall.
Uchumi said it expected to complete a rights issue in the second half of its 2014 financial year to fund expansion.