Uchumi sends Ciano packing as it launches forensic audit

Corporate News

Uchumi Supermarkets chief executive Jonathan Ciano. PHOTO | FILE 

By JOHN GACHIRI and SIMON CIURI

In Summary

• Uchumi has sent CEO Jonathan Ciano and CFO Chadwick Okumu packing for “gross misconduct and gross negligence” that has left the listed retailer owing suppliers Sh1 billion.

Uchumi Supermarkets’ board has let go of chief executive Jonathan Ciano even as it opened a forensic audit into the cash flow problems that have in recent weeks left the retail chain with empty shelves.

The board said it had sent Mr Ciano and the chief finance officer, Chadwick Omondi Okumu, packing for “gross misconduct and gross negligence” that has left the listed retailer owing suppliers Sh1 billion.

“The board has taken decisive action to address the challenges we are facing and has a clear roadmap to return Uchumi Supermarkets to sustainable and profitable operations,” Uchumi chairperson Khadija Mire said at a briefing on Monday.

Owino Ayodo, the general manager, operations, has been appointed the acting chief executive of the listed retail chain as the hunt for a new head and CFO begins. The human resource manager, Michael Kibe, has been suspended.

Uchumi has been struggling to pay suppliers since late last year and the board said it plans to sell non-core assets worth Sh2 billion – such as land- to pay suppliers, the lifeline in a retail chain.

The board ruled out a possible government bailout or the sale of the company to a competitor, insisting that the company could still be salvaged.

One of its priorities is to return key branches at Sarit Centre, Hyper, Langata Hyper, Ngong Road Hyper, Capital Centre and Koinange Street back to normalcy.

Uchumi has failed to return to its glory since it got relisted on the Nairobi Securities Exchange (NSE) in June 2011 after a five-year suspension, following gross mismanagement that saw it close shop in June 2006.

Ironically, it was Mr Ciano who resuscitated Uchumi, with the help of a government bailout and suppliers, who agreed to convert their debt into shares.

READ: End of Uchumi CEO term sets stage for new executive team

The road back to profitability has, however, proved a tortuous one for the retail chain, marked by serial borrowing and a lack of a clear strategy that has seen Uchumi trail Naivas, Tuskys and Nakumatt, its main rivals.

To find its position in the market the board said it was set to hire a management consultant to write a new blueprint for the 38-year- old firm.

“It is very important that we validate the ongoing regional expansion in view of the performance of our business while taking steps to position ourselves to compete effectively in the changing retail environment,” said Ms Mire.

Competition is also set to become tighter with the entry of Walmart, French-based Carrefour and Botswana retail chain Choppies.

Signs that Mr Ciano was set to exit began to show in inability to handle suppliers yet the retailer had borrowed loans and funds from shareholders in the 2014 rights issue that raised Sh896 million.