Uchumi Taj Mall branch assets face the hammer

Uchumi Supermarkets is facing an auction of its goods and equipment held at the closed Taj Mall branch in Nairobi as the landlord seeks to recover Sh50 million in rent arrears.

The loss-making retailer is said to have defaulted on paying rent starting September last year.

The Taj Mall owners say efforts to get Uchumi to clear the debt have been fruitless so far. Uchumi was paying slightly more than Sh5 million in rent and service charges every month for the Taj Mall outlet.

“We have given them (Uchumi) payment options but they claim that they do not have money. We are left with no option,” said businessman Ramesh Gorasia, who is one of the Taj Mall owners.

The Uchumi property inside the closed Taj Mall branch is now set to be sold by Moran Auctioneers on May 18.

The retailer had signed a 10-year lease with the landlord that was set to expire in 2021.

“We closed the branch a while ago, but also remember it was also on a road reserve. I’m not in a position to comment on the auction right now, maybe you can check with us in one or two days’ time when our legal team will advise us on the way forward,” Uchumi Head of Marketing Race Musumba said.

Uchumi last month announced the closure of five loss-making branches including the Taj Mall outlet. The supermarket said the move was aimed at cutting operating costs.

Uchumi Chief Executive Julius Kipng’etich defended the closures then, saying the decision was expected to hasten the chain’s rebound to profitability.

“Their closure will enable us to channel our resources to fewer branches and optimise operations for maximum gain,” Mr Kipng’etich said.

The closure of the Taj Mall, Embu, Eldoret, Nakuru and Kisii branches rendered 253 workers jobless.

The supermarket began downsizing last year when the company made shock exits from Uganda and Tanzania, in what the NSE-listed firm said was a move to stem excessive financial bleeding.

The retailer now has 19 branches, from the original 37, spread across the region.

In October last year Uchumi, which occupied a fifth of Taj Mall space, claimed that it was in search of an alternative location following the announcement by the National Land Commission that the shopping complex is located on a road reserve, but it did not make good its word.