End of Uchumi CEO term sets stage for new executive team

Uchumi Supermarkets chief executive Jonathan Ciano’s contract is set to end next month, setting the stage for a possible change in the retail chain’s executive suite.

Mr Ciano said in an interview on Thursday that he is negotiating for renewal of his term with the company’s board, but some Uchumi directors gave strong indications that he may not get a fresh mandate at the Nairobi Securities Exchange-listed retailer.

“We are in negotiation as my contract ends in July. I am proceeding on official business abroad and on my return take my normal annual leave,” said Mr Ciano.

Sources within Uchumi’s board, who declined to be named discussing sensitive company issues, said Uchumi’s management is “looking for new blood” to take charge of the listed retail chain that has been struggling in the fiercely competitive market.

If it comes to pass, Mr Ciano’s exit would end a nine-year stewardship of Uchumi during which time he lifted the retailer from statutory management and oversaw the resumption of trading of its shares at the NSE.

It also emerged that the company may be looking to bring in new management in other departments such as finance.

Sources said some of the main issues that the board wants addressed is Uchumi’s shrinking market share, falling profit and concerns on the lack of a clear strategy on how the retailer will fare in an industry that has huge potential despite increased competition.

HAS LOST GROUND

International retail chains have in recent months entered the Kenyan market to fight for their share of the growing formal retail space.

Walmart opened its first store in Garden City Mall last month, Carrefour is expected to open its doors by the end of the year while Choppies of Botswana has made a bid to buy out the Ukwala chain of supermarkets.

Locally, Uchumi has lost ground to brands such as Nakumatt, Tuskys and Naivas supermarkets.

Increased debt is also influencing the board’s decision to look for new management.

The retailer last year took a Sh405 million loan from the Co-operative Bank to pay suppliers and a Sh600 million loan from KCB to fund expansion. It floated a rights issue that raised Sh896 million in the same year.

This week, electricity transmitting company Kenya Power suspended its contract for customer bill payments at Uchumi branches on grounds that the retailer was not remitting cash paid in.

“Change is long overdue. Something had to be done,” said the source who is privy to Uchumi boardroom proceedings. The proposed management change also comes three months after the retail chain got new directors to reflect the change in its shareholding structure.

Jamii Bora Bank chief executive Sam Kimani was appointed to the board after the bank bought a 15.8 per cent stake in the retailer, making it the single-largest shareholder.

Uchumi reported a drop in both half-year sales and net profit for the six months ended December 31, 2014.

The listed supermarket chain made a half-year loss of Sh262.3 million compared to a net profit of Sh106.9 million recorded a similar period a year before while sales dropped to Sh6.8 billion from Sh7.2 billion over the same period.

Other senior managerial changes that have happened in the retail industry include Tusky’s appointing of Dan Githua as its chief executive, the first non-family member to head the second-largest retail chain.

This story first appeared on www.businessdailyafrica.com