Uchumi to close branches, retrench workers
07 July 2015, 21:44
Nairobi - Kenya's Uchumi Supermarkets will close unprofitable branches after it expanded at a rapid pace in recent years, its new finance chief said on Tuesday.
The company fired its chief executive, Jonathan Ciano, and its finance chief, Chadwick Omondi Okumu, on June 15 and ordered a forensic audit to determine why it was bleeding cash and falling behind on supplier payments.
"We made an attempt to expand faster than our capabilities and we will be taking a pit stop in terms of branch and country expansion," Sam Oduor told an investor briefing.
Uchumi, which also has outlets in Uganda and Tanzania, opened several branches in recent years under Ciano.
Oduor accused the previous management of not properly assessing new outlets and of failing to keep an eye on whether they made a profit.
"We are looking at this on a case-by-case basis," Oduor said, adding that unprofitable stores will be closed down.
Uchumi has negotiated a 500 million shilling ($4.98 million) loan from KCB Bank to tide it over as it sells off assets, including land in Nairobi valued at around 2 billion shillings.
"Some of our branches are not fully stocked," Oduor said.
Uchumi has hired KPMG to carry out a forensic audit spanning the last two years when the rot began to set in.
The company is talking to consultancy firms over developing a new corporate strategy, including assessing whether the chain requires a investor from within the industry, Oduor said.
He said Uchumi would not allow members of its board or staff to be involved with suppliers contrary to past practices.
"Have we had insiders supplying to Uchumi? Yes. Have they been giving us value for money? No," he said, adding they would also cut out middlemen and buy directly from suppliers.
Uchumi is facing competition in Kenya from other domestic brands such as Nakumatt and new entrants. Carrefour is due to open stores starting this year, under its franchisee, the United Arab Emirates-based Majid al-Futtaim.
Its shares have fallen 21 percent since Ciano and Okumu were fired, and were down 3 percent at 8.20 shillings on Tuesday.
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