Uchumi turnaround plan bearing fruit


Published on 12/07/2009

By Macharia Kamau

Uchumi Supermarkets’ turnaround plan might finally be bearing fruit with the opening its first branch in three years.

Managing Director Jonathan Ciano said the outlet located at Ruaraka along Thika Road is the first of the four new branches expected this year.

It will open another branch in Nairobi while the other two will be located in Mombasa and Western Kenya.

Ciano said the Thika Road store, which has been fashioned as a convenience store and smaller than the other outlets, is a milestone for the retailer, which has been under receivership since mid 2006 after being declared insolvent.

Since being placed under receivership, the chain has been forced to close some of its outlets under a restructuring process.

It now operates 15 stores, compared to the 28 it previously had. Its search for a strategic investor has proved difficult and Ciano recently said getting one at the moment might be even given the condition of the economy. The new branch started operating early this week and will officially be launched on Wednesday and brings the number of the outlets to 16.

“We opened our doors to the public early this week and the response that we are getting from customers is encouraging,” said Ciano.

Cleared debts

The store is located next to where Nakumatt’s outlet on Thika Road was situated before being demolished for allegedly being on the road reserve.

Uchumi is among the few large retailers serving the busy highway, which analysts say has a high potential, not only for retail trade but other businesses given the large population the road serves. The road also links Nairobi to the industrial town of Thika.

In a change in its business model, Uchumi intends to open more branches, but will occupy new premises as tenants in contrast to buying land and developing it as was the case in the past.

“The other branches are already being put up in partnership with developers… we are not building any on our own,” he said. The chain expects its pre-profit tax for the just concluded financial year to go up by 25 per cent to Sh132 million compared to Sh106 made for the year ending June 2008. Last year’s profit was a turnaround from its loss making ways two years ago.

At a recent media briefing, Ciano said by June, the supermarket had cleared more than half of the Sh957 million owed to financial institutions and suppliers.

 

 

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