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Nakumatt outlet shut over rent dispute

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Nakumatt has seven branches in and around Uganda’s capital. PHOTO | FILE

One of Nakumatt Supermarket's nine branches in Uganda was Tuesday closed following rent arrears running into millions of shillings, highlighting the depth of the retailer’s financial woes.

Nakumatt has confirmed that its Katwe branch, which is three kilometers from Kampala’s central business district, has been shut due to a rent dispute.

The retailer did not divulge the amount owed but Uganda's local media is reporting that the firm owes the outlet’s landlord approximately Sh8.5 million, forcing him to bolt the outlet’s doors in a bid to recover the money.

In response to queries from the Business Daily, Nakumatt said it was hoping to resolve the issue as soon as possible.

"This has accrued over the past few months due to a depressed trading environment and poor sales at the specific branch. Consequently, this has heavily constrained our cash flow necessitating the ongoing restructuring and capitalisation efforts," a Nakumatt official said.

Kenya's largest retail chain, which also has a presence in Tanzania and Rwanda, has seven branches in and around Uganda’s capital and one each in the towns of Entebbe and Mbarara.

Debt pressure

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 payment delays to suppliers.

This has led to stock outs at many of its outlets.

The retailer is currently working on a $75 million (Sh7.5 billion) deal to sell a 25 per cent stake to a strategic investor to retire its heavy debt burden in a transaction that values the business at about Sh30 billion.

Nakumatt, which operates a total of 64 branches, recently closed its Ronald Ngala Street branch in Nairobi, citing years of low sales from the downtown shop in a high cost business environment.

READ: Nakumatt closes Ronald Ngala branch after years of low sales volumes

ALSO READ: Long-serving Nakumatt boss exits