Uchumi Supermarkets will on Sunday close its
prime Sarit Centre branch as part of its cost management and turnaround
strategy that has seen its store count drop to 16.
The
struggling retailer, which has operated the store for over three
decades, says it will now look for an alternative space that is
“cost-effective” and aligned to “changing trends” in the sector.
The
NSE-listed retail chain has over the past months shut non-performing
branches across the country as increased competition from old and new
rivals as well as a mountain of debt has strained the business.
“Uchumi
has been located at the Sarit Centre for over 30 years and was among
the first tenants,” Andrew Dixon, Uchumi’s chief operating officer, said
in a statement Friday.
“We will be exploring possible relocation at other venues for
our most unviable stores to more cost-effective and strategic locations
as part of the ongoing strategy to cut costs, settle debts and optimise
cashflow.”
Awaiting investor
Heavy
debts and stock-outs have left Uchumi’s Kenyan operations in a
precarious state and forced it to exit Tanzania and Uganda where is was
consistently posting losses.
Uchumi, a publicly listed
company, is relying on a Sh3.5 billion from yet-to-be-secured equity
investor and Sh3 billion from sale of land in Kasarani, to jumpstart the
business.
The retailer recently received a Sh700
million cash injection from the Treasury just before Christmas, which it
used to restock its branches in time for the festive season.
Last month, Uchumi also closed its Jipange (Ruaraka) and Capital Centre branches following sustained low footfall at the outlets which were at one point key to the business’ bottom-line.
Mr
Dixon recently hinted on the imminent closure of the Sarit Centre
branch, saying they were negotiating with the landlord to extend their
expired lease even as he admitted that hopes remained dim.
“Uchumi
was our first tenant when we opened the Sarit Centre and we have had a
long and good relationship,” Nitin Shah, the shopping complex’s COO,
said in a statement.
Sources indicate that French
retailer Carrefour is interested in the Sarit space, having approached
the landlord, Soma Properties.
Carrefour Kenya’s
executive Franck Moreau declined to confirm the talks, but said the
retailer is willing to expand whenever an opportunity arises.
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