Uchumi Supermarkets to cut jobs, gets Sh500m KCB loan
What you need to know:
In a drastic move meant to cut out brokers from its supply chain, the retailer will also source supplies directly from manufacturers.
Uchumi Supermarkets has embarked on a cost-cutting exercise that will include closing down branches and laying off staff.
The retail chain will also sell a 20-acre piece of land it owns in Kasarani, Nairobi, priced at over Sh2.2 billion, in plans to settle outstanding debts to suppliers.
By mid last month, it owed suppliers Sh2.3 billion, but it approached Kenya Commercial Bank for a Sh500 million loan to clear some of the dues. The chain store also announced it had finalised a Sh500m financing arrangement with Kenya Commercial Bank to pay outstanding supplier debts.
In a drastic move meant to cut out brokers from its supply chain, the retailer will also source supplies directly from manufacturers. This will eliminate the practice in which insiders supplied goods to the retailer at inflated costs. The move would also see staff with links to suppliers exit the company.
The retailer’s chief finance officer, Mr Sam Oduor, said that Uchumi’s problems began in 2013, when the rights issue that was originally meant to raise Sh1.5 billion was delayed by nearly two years.
The rights issue, which was later undertaken in 2014, raised over Sh800 million, Sh700 million short of the original target.
This affected its expansion plans and payment to a number of suppliers. The store has had challenges getting stock due to delays in paying suppliers.
