Uchumi axes 5 branches, 253 jobs to stop 'financial bleeding'

Monday March 21 2016

Uchumi Group CEO Julius Kipng'etich at a past event in Nairobi on January 20, 2016. Uchumi Supermarkets has opened talks with its suppliers in a bid to have the creditors convert the debts owed to them by the retailer into shares. PHOTO | DIANA NGILA | NATION MEDIA GROUP

Uchumi Group CEO Julius Kipng'etich at a past event in Nairobi on January 20, 2016. Uchumi Supermarkets has opened talks with its suppliers in a bid to have the creditors convert the debts owed to them by the retailer into shares. PHOTO | DIANA NGILA | NATION MEDIA GROUP 

By BRIAN NGUGI
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Uchumi Supermarkets Limited on Monday shut down five of its outlets in Kenya to cut costs.

Chief executive Julius Kipng’etich said the closure of the branches is aimed at reducing the retailer’s operational costs enabling it to concentrate its efforts on a leaner structure.

Mr Kipng’etich defended the shock move even at a time the loss-making retailer is implementing a growth strategy, insisting that the publicly traded retailer “is well on track to recovery”.

“Their closure will enable us channel our resources to fewer branches and optimize operations for maximum gain,” said Mr Kipng’etich.
The affected branches are Taj Mall, Embu, Eldoret Sugarland, Nakuru and Kisii.

The closures will render redundant 253 employees, who will be laid off.

STATUTORY REQUIREMENTS

Mr Kipng’etich said the retail chain had adhered to all the required legal and statutory requirements in implementing the decision.

In November 17 last year, the retailer made shock exits from neighbouring Uganda and Tanzania to stem what Dr Kipng’etich said then was excessive financial bleeding.

Before then, the retailer had closed two of its outlets in Kenya — one in Rongai and the other in Syokimau.

As of June last year, Uchumi had 37 outlets with 4,500 workers spread across East Africa, with a majority of them in Kenya. The retailer now has about 19 branches across the country.

The chief executive has defended the drastic closures, saying they were long overdue.

“We needed to reorganise. There was no need of draining more money. Our strategy was to stop the bleeding. The outlets were just not viable,” he said after the Uganda and Tanzania exits.

Mr Kipng’etich, who took over from sacked CEO Jonathan Ciano, has in the past blamed the retailer's previous management, saying they lacked a plan to support the expansion.

Mr Kipng’etich, in an earlier interview, cited “uncontrolled expansion” spearheaded by Mr Ciano for the retailer’s plunge into troubles.