Uchumi Supermarkets has exited the Uganda and Tanzania markets in a drastic reorganisation to stop financial bleeding.
The retailer's chief executive, Mr Julius Kipng'etich, said the company's board had decided to close down regional units in order to speed up the process of stabilising its Kenyan operations.
“Our outlets in Uganda and Tanzania make up only 4.75 per cent of our operations yet they account for over 25 per cent of our operating costs. The two subsidiaries have not made any profits over the last five years, which means they have been draining the parent operations,” said Mr Kipng’etich.
The Uchumi CEO said the retail chain has informed the Capital Markets Authority, the Nairobi Securities Exchange and other key stakeholders of the decision, adding that soon the retailer would seek shareholders' approval to implement the decision.
"All stores in both markets are now closed and will be liquidated," Mr Kipng'etich said.
The new CEO took over the helm of the retailer recently following the sacking of former CEO Jonathan Ciano.
Uchumi plans to re-enter the markets at an appropriate time in the future once the parent business has stabilised. In the meantime, it will not delist from the regional bourses.
"It is important that we get Kenya back to optimal operations and profitability by taking good care of our suppliers and creating value for our shareholders before reconsidering regional expansion," added Mr Kipng’etich.
“We are confident that we can now concentrate on turning around Uchumi by focusing on the 95 per cent of the business that makes money for shareholders and are optimistic that we will achieve this within the shortest time possible,” the CEO added.
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