advertisement

Corporate

Nakumatt announces executive shake-up in turnaround plan

Shoppers at a Nakumatt outlet in Nairobi. PHOTO | FILE
Shoppers at a Nakumatt outlet in Nairobi. PHOTO | FILE 

Retail chain Nakumatt has hired a former executive of UK retailer Tesco to head its marketing operations.

The appointment comes at a time when Nakumatt is gearing to close a deal that will see it offload a 25 per cent stake to a deep-pocketed investor, expected to pull it out of a bourgeoning debt crisis.

The retail chain said it had appointed Andrew Dixon, who has served as an executive director at Tesco, to the position of chief marketing officer.

The management shake-up that was made public Thursday also introduces three new operational positions.

Mr Dixon, Manoj Warrier and James Gakumo were named as new chief marketing officer, chief information officer and chief risk officer respectively.

Nakumatt managing director Atul Shah said in a statement that the retail chain would rely on the three executives’ vast experience in retail operations gained from their previous local and international postings to speed up its turnaround.

“The new executives will be charged with the responsibility of reinvigorating the key dockets as we scale new heights,” said Mr Shah, adding that the appointments were also geared towards enhancing Nakumatt’s corporate governance standards in line “with the ongoing organisational
restructuring demands.” The changes are, however, seen as part of the actions Nakumatt owners are taking to make the business more attractive to the prospective investor.

“The shakeup is about strengthening the management team by getting international experience to make themselves more attractive from a corporate governance point of view. That may be the signal they are trying to send,” Rich Management CEO Aly-Khan Satchu told the Business Daily.

Investors are known to set up several conditions ahead of purchasing stakes in a company. The retail chain on Wednesday revealed that it was in the final stages of selling the stake to the strategic investor, in what insiders have said is part of a plan to retire the supermarket chain’s heavy debt load.

Nakumatt has set the cost of the 25 per cent stake at Sh7.7 billion, potentially valuing the entire business at about Sh30.8 billion.

It is also seeking approval to sell a 51 per cent stake in its Tanzanian unit to Ascent Investment Ltd as it follows through the plan to retire its debt load.

Mr Dixon is an old hand in the global retail industry with more than three decades experience, primarily with Tesco.

“Dixon developed the Tesco Health and Beauty in store concept, led the development of Tesco’s core private label brands, launched and operated the Tesco Express convenience store format, launched the Tesco brand in Poland, and also managed the largest loyalty programme in Europe - the Tesco Clubcard,” Nakumatt said in a statement.

Highlighting the need to safeguard against risk, the statement said the newly appointed risk management lead Mr Gakumo had joined Nakumatt with “a clear brief to streamline the firm’s risk control functions” as the company steps up its cost and overall financial management strategies.

Nakumatt is among the Kenyan retailers currently battling strong headwinds related to huge unpaid supplier bills. Supermarkets are also struggling to finance working capital using costly bank loans even as they battle increasing cases of shrinkage.

Nakumatt’s gross debt more than tripled to Sh15 billion in February 2015 from Sh4.2 billion in 2011, piling pressure on operations and resulting in long delays in payment to suppliers.

Nakumatt, Tuskys and Naivas jointly owed suppliers Sh8 billion in unpaid dues in September 2015. Some of the payments date back to early 2014.

Mr Warrier has served as the retailer’s information technology manager in the past three years. Prior to joining Nakumatt, Mr Warrier served in various ICT postings at Reliance Retail, Essar IT, Shoppers Stop and Globus Stores in India.

Nakumatt, which is Kenya’s biggest retail chain with 61 stores across East Africa, has only identified the buyer of the 25 per cent stake as a foreign fund.

The retailer expects the equity fund to help retire existing funding tools, including bank loans and related debts. Nakumatt, with 42 outlets in Kenya, is majority­ owned by the Shah family (92.3 per cent). 

advertisement