Corporate News
Shoppers queue to be served at the till at Nakumatt Westgate. Nakumatt
Supermarkets lost at least Sh4.3 billion in sales and saw revenue fall
by nearly a tenth last year as its branches in Kenya felt the full
effect of the Westgate Mall terrorist attack. FILE PHOTO | NATION
By HERBLING DAVID
In Summary
- In their latest trading update covering last year, Nakumatt has reported gross sales of over $600 million (about Sh52 billion), compared to $650 million (Sh56.5 billion) a year earlier, a drop of 7.7 per cent.
- Nakumatt attributes the larger drop in sales to a slow economy as well as fears among shoppers of Westgate-style assaults on other malls.
- Kenya’s retail sector joins tourism as one of the biggest casualties of rising insecurity.
Retail giant Nakumatt Supermarkets lost at least
Sh4.3 billion in sales and saw revenue fall by nearly a tenth last year
as its branches in Kenya felt the full effect of the Westgate Mall
terrorist attack.
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The plunge highlights the rough seas retailers are braving
in an environment characterised by insecurity concerns and sluggish
economic growth amid rising fixed costs such as wages, rent and
insurance.
In their latest trading update, the regional chain
has reported gross sales of over $600 million (about Sh52 billion) for
the fiscal year ended February 2014, compared to $650 million (Sh56.5
billion) a year earlier, a drop of 7.7 per cent.
Nakumatt executives attribute this to a slowdown in
business at other malls where they are anchor tenants following the
destruction of their Nairobi outlet at the Westgate Mall in the
terrorist attack by Somalia’s Al-Shabaab militia in September last year.
More than Sh1.5 billion worth of stock was lost in a
fire started during an assault on the attackers by security forces.
Insurance payments for some of the losses were made before the end of
the financial year totalling Sh1.41 billion.
Before the attack, the Westgate branch had a
turnover of about Sh450 million a month, so its loss six months to the
end of the financial year meant that Nakumatt had to forego at least
Sh2.7 billion in sales.
Nakumatt attributes the larger drop in sales to a
slow economy as well as fears among shoppers of Westgate-style assaults
on other malls.
“Top-line, we have managed to cross the $600
million gross sales mark,” said Nakumatt Holdings managing director Atul
Shah in an interview with the Business Daily.
“It is true to note that the loss of Westgate significantly slowed growth, alongside (the) obvious economic downside.”
In the trading update, Mr Shah said: “Retail
outlets have been one of the hardest hit business fronts due to security
concerns.”
Kenya’s retail sector joins tourism as one of the
biggest casualties of rising insecurity, providing a clearer view of the
economic impact of the Westgate attack, in which at least 67 people
died.
According to the Economic Survey 2014, growth in
wholesale and retail trade slowed to 7.5 per cent last year compared to
nine per cent in 2012.
Uchumi Supermarkets’
sales fell four per cent to Sh7.2 billion in the six months to December
2013, blamed on reduced customer spending due to insecurity. The
Nairobi Securities Exchange-listed retailer’s net profit plunged by a
fifth to Sh106.9 million in the half-year period compared to Sh131.9
million as at December 2012
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