Corporate News
Uchumi Supermarket Aga Khan Walk branch in Nairobi. The supermarket
chain has posted marginal growth weighed down by losses in Uganda and
Tanzania. PHOTO | FILE
By DAVID HERBLING, hdavid@ke.nationmedia.com
In Summary
- Uchumi says in its latest annual report that the Uganda unit recorded its third consecutive loss in the period while the Tanzanian operations continued its loss-making streak since Uchumi set up shop in Dar es Salaam in 2011.
- The performance means that Uchumi is relying on its Kenyan operations to turn a profit, clouding its short term profit outlook even as it plans to deepen its regional expansion with an entry into Rwanda by December.
Uchumi Supermarkets
saw its subsidiaries in Uganda and Tanzania sink deeper into losses in
the year ended June, signalling difficulties in the firm’s quest to
expand its share of the competitive regional retail market.
The Nairobi Securities Exchange-listed retailer says in its
latest annual report that the Uganda unit recorded its third consecutive
loss in the period while the Tanzanian operations continued its
loss-making streak since Uchumi set up shop in Dar es Salaam in 2011.
The losses by the subsidiaries weighed down
Uchumi’s net profit which rose 7.6 per cent to Sh384 million compared to
Sh357 million the year before.
Uchumi chief executive Jonathan Ciano said: “Total
group sales registered a marginal growth due a drop in Uganda mainly
attributed to competition, supply chain challenges and some locations
becoming untenable due to infrastructural and tenancy mix challenges.”
He added that new branches in Kenya and Tanzania “are yet to mature” to begin contributing to the bottom-line.
Uchumi’s outlets in Uganda posted a pre-tax loss of
Sh341.6 million in the period, compared to Sh256.4 million a year
earlier and Sh75.9 million in 2012.
The poor performance in Uganda forced Uchumi in
September to shut down one of its six outlets in Kampala located at
Freedom City mall outlet. The closed branch had been opened in June
2012.
The retailer last made a pre-tax profit of Sh32.7
million in Uganda in 2011. In Tanzania, where Uchumi has four outlets,
the retailer made a pre-tax loss of Sh125.2 million, a slight
improvement from Sh131.3 million loss the year before and Sh142.7
million in 2012.
Uchumi made a maiden loss of Sh11.7 million in
Tanzania in 2011 when it set up the first hyper branch at the Quality
Centre mall, Dar es Salaam.
The performance means that Uchumi is relying on its
Kenyan operations to turn a profit, clouding its short term profit
outlook even as it plans to deepen its regional expansion with an entry
into Rwanda by December.
The retailer has lined up a Sh895.8 million rights issue
due to open on November 10 to raise cash to open more units locally to
defend its market share in Kenya and fund regional expansion.
The offer has been priced at Sh9 a piece, just
under its current trading price of Sh9.9 on the Nairobi Securities
Exchange and representing a nine per cent discount. Existing
shareholders are e
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