Kenyan supermarket's endless woes as employees down tools
At its height, Uchumi had various branches in Kenya and East Africa.
At its height, Uchumi had various branches in Kenya and East Africa not to mention employing thousands of Kenyans.
In 2014, Uchumi, for instance, posted $38.4 million in profit after tax for the full year ended June 30.
However, since then, Uchumi has undergone through endless financial diffculties.
Here are just but a few financial difficulties the supermarket has experienced over the year.
Employees down tools
Uchumi employees on Tuesday hold demos in Karatina over unpaid salaries.
The employees claimed they have not been paid for two months.
The Supermarket is yet to pay its over 1300workers April and May salaries, and the union has already moved in to seek government intervention.
Uchumi CEO, Dr. Julius Kipngetich has however moved to assure the employees they will be paid their dues by the end of the week.
Government suspends Sh1.3 billion loan
Uchumi supermarket revival plans were left in a limbo after the government decided to suspend a multi-billion loan to the retain chain, pending the audit of its expenditure.
The government backed its move to suspend the cash disbursement arguing that there was need to have a clear audit of the firm’s spending plan.
The suspension comes as the retailer struggles to find a strategic investor to inject $50 million into the business.
Despite the government injecting $11.83 million into Uchumi supermarkets to enable the firm to repay debts and stock its stores in August 2016, its shelves are still empty.
This came into light recently when NASA presidential candidate Raila Odinga while shopping at Uchumi supermarket for the precious Unga (Maize flour) found empty shelves.
You would think that the government having a 15 percent stake in Uchumi Supermarkets would make sure its shelves are forever full.
It does not inspire confidence either that despite the government being the one which procured the subsided maize meal it would prioritised Uchumi supermarket.
Also read: TRM,Nakumatt fight over rent arrears
Uchumi operates at the mercy of creditors
Uchumi showed no signs of recovery in the first quarter of 2017.
Its share price plummets by 37 percent from $0.036 to $0.023 per share in the quarter.
Add to its troubles the Nairobi securities exchange listed firm also owes creditors a total of $70 million but its assets are worth $50million with auditors, meaning that even if Uchumi sold all its assets to pay off its creditors, it could still be in a $20 million debt.
Government pleas through the National Treasury to Capital Markets Authority (CMA) to drop Uchumi from trading at the NSE have often fallen on deaf ears with the authority arguing that doing so will demoralize those who want to invest in the company.
Uchumi sinks deeper into losses
Uchumi Supermarkets announced a post-tax loss of $28 million in the full-year ending June 30, 2016.
The Management attributed the poor financial results to the closure of non-performing branches in Uganda, Tanzania and Kenya, and supply chain challenges.
“The group lost control of the subsidiaries in Uganda and Tanzania in October 2015. The short term effect to June 2016 was the decline in revenues,” the retailer said in its consolidated income statement.
Uchumi shuts down five branches and sacks hundreds of employees
Uchumi Supermarkets closed operations in five outlets within Kenya as part of its reorganization process in 2016.
The supermarket also let go 253 workers as part of the drastic move.
Branches closed down included Taj Mall, Embu, Eldoret Sugarland, Nakuru and Kisii to reduce the retailer's operational costs.
This was barely months after the firm also closed down its operations in Tanzania and Uganda.
JOIN OUR PULSE COMMUNITY!
Eyewitness? Submit your stories now via social or: