Uchumi stock rises despite profit warning

Uchumi’s profit warning failed to dampen local investor appetite for its stock as it gained 4.3 per cent to close Monday trading at Sh8.50.

The retailer was the fifth leading gainer despite board’s profit warning. The Board Chair, Ms Khadija Mire announced that the Supermarkets forecast that earnings for the financial year ending June 2015 will be lower than those recorded in 2014 by at least 25 per cent.

The company’s regulatory filings explained that the profit warning was attributed to the expected decline to working capital challenges faced within the year.

Cash flow problems which was in June estimated to have held up Sh1 billion owed to suppliers have strained their working relationship leaving the retailers almost empty.

“The Board in June also forced out the top management of Uchumi Supermarkets and is in the process of replacing it through competitive recruitment,” Ms Mire said.

KIPNGETICH

She added that after the appointment of the Chief Executive Officer Dr Julius Kipng’etich and Chief Operating Office Mr Willy Kimani, other appointments will soon be announced to revamp the governance of the retail chain.

The Board also noted that they were awaiting for a final report by Deloitte Consultants that will draw up a new business model.

Uganda and Tanzania have continued to contribute to the company’s growth according to the regulatory filling.

Last year Uchumi reported Sh384 million in profit after tax for the full year ended June 30 although the figures have now been cast in doubt in recent revelations.

Analysts say the company used the revaluation of its properties to conceal losses it made in the past two years.

Uchumi would have been in the loss-making territory from 2013, according to London-based Exotix and Kenya’s Equity Investment Bank.