Struggling Uchumi closes its flagship Ngong Hyper branch - Daily Nation

Struggling Uchumi closes its flagship Ngong Hyper branch

Tuesday December 4 2018

Mohamed Mohamed

Uchumi CEO Mohamed Mohamed. FILE PHOTO | NMG 

By ANNIE NJANJA
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Debt-ridden retailer Uchumi has closed its flagship Ngong Hyper store amid a biting cash-crunch that has seen it drop its branch count by 30 over the past three years.

The struggling retailer’s CEO Mohamed Mohamed on Tuesday told the Business Daily that the store’s closure is short-term and will re-open once it receives Sh2.8 billion from the sale of Kasarani land, which it hopes to use to re-stock its branches.

“The Ngong Road property does not belong Uchumi. We however have tenancy and should anything change we will make it public. We have temporarily shut down as we finalise our capital raising plans. Part of this plan is the sale of the Kasarani land which is being finalised, this will enable us stock our 10 stores,” said Mr Mohamed.

“As stated before we are implementing our turnaround strategy that includes franchising, opening of smaller stalls, going digital and cost leadership initiatives,” added Mr Mohamed.

Uchumi, which owes suppliers over Sh3.6 billion, has been banking on the sale of the land to turn around its fortunes but the money has been slow in coming because of challenging approval processes.

Even after the sale of the land, Uchumi will need to secure additional funding to help it out of its current financial distress.

The retailer has been struggling under the weight of debts and a cash crunch that has also affected its ability to pay rent and staff salaries on time. The retail workers’ union has previously said that non-payment of salaries, which began last December, had affected 1,355 employees.

Uchumi is in a tight liquidity position that is slowing down its recovery.

Non-payment of suppliers has triggered a winding up petition whose claims hit Sh900 million at the beginning of November after 14 more companies joined the case.

Court records show that 20 companies have joined the case filed by Githunguri Dairy Farmers Co-operative Society in September seek­ing to wind up the retailer.

In 2015, following aggressive expansion regionally, the publicly-listed retail chain operated about 40 branches in Tanzania, Kenya and Uganda. Uchumi, which is saddled with debt, soon thereafter exited these regional markets following sustained losses and extended the branch closures to Kenya.