Uchumi Supermarket has announced closure of its operations in Uganda and Tanzania due to financial constraints.
In a statement issued today, the Chief Executive Officer, Julius Kipng’etich said the two subsidiaries have been posting losses in the last five years, making a turnaround hard for the troubled retailer.
He explained that their outlets in Uganda and Tanzania make up only 4% of operations yet they account for over 25% of their operating costs.
The closure, according to Kipng’etich would quicken the process to stabilize its Kenyan operations.
Uchumi has had a series of problems with its suppliers having accumulated a combined debt of more than Shs33b.
In Uganda, the retailer has been partially exiting, having closed two branches in Kabalagala and Natete last week.
On Monday Court Bailiffs, working on the directive of a court raided the chain’s main outlet at Garden City in Kampala, seeking to recover a more than Shs180m debt owed to Ugachick-one of the supermarkets poultry products suppliers.
Uchumi has been employing more than 400 people in its six outlets in Uganda.
Accordingly, Mr Kipng’etich said they had informed the Capital Markets Authority in Kenya, Nairobi Securities Exchange and other key stakeholders but would go ahead to implement the decision pending approval from shareholders.
Mr Kipng’etich took over the troubled retailer following the sacking of former chief executive officer Jonathan Ciano, over what the retailer’s board said was gross misconduct.
However, Mr Kipng’etich said they would re-enter the markets at an appropriate, adding, “… we can now concentrate on turning around Uchumi by focusing on the 95 per cent of the business that makes money for shareholders.”
“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,” he added.
Story By Othman Ssemakula
