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Tuskys sets growth target beyond failed Ukwala bid

Tuskys on Tom Mboya Street, formerly Ukwala Supermarket, closed after a ruling by CAK. PHOTO | FILE
Tuskys on Tom Mboya Street, formerly Ukwala Supermarket, closed after a ruling by CAK. PHOTO | FILE 

In nearly a month’s time, on January 19, lawyers representing the Competition Authority of Kenya (CAK) will face off in court with advocates appearing for Tuskys and Ukwala supermarkets in one of the protracted legal battles that made headlines this year.

Tuskys is seeking a reversal of the competition watchdog’s June decision rejecting its application to acquire five Ukwala outlets in Nairobi, on grounds that the buyout would curtail competition in the capital’s retail sector.

The Competition Authority has, however, strongly defended its decision which also included fining the two supermarket chains Sh5.3 million for initiating the acquisition without regulatory approval.

CAK’s veto of the buyout effectively applied brakes on Tuskys’ expansion plans. Had the retailer been allowed to finalise the acquisition, its stores count in the central business district would have instantly increased to 14.

But as the two parties proceed to court, Tuskys is looking beyond the botched transaction for growth in 2015.

“Our expansion plans are still alive and we are on course to launch 10 new stores by June 2015. We will concentrate our efforts within Nairobi but you should expect new stores to also come up in places like Naivasha and Kisumu,” Tuskys chief operating officer Peter Leparachao told the Business Daily.

“I cannot (however) get into the specifics of our issue with CAK since that is an ongoing court matter.”

Tuskys, which has more than 50 stores nationally, is ranked Kenya’s second-largest retailer with revenues topping Sh25.2 billion last year. The retailer trailed Nakumatt whose sales grossed Sh55 billion in the year to February 2013.

The retailer sought to cement its position in the central business district by acquiring three Ukwala stores in a deal reportedly worth Sh200 million.

CAK claimed that this transaction was done behind its back and fined the two businesses Sh5.3 million.

A month later, Tuskys submitted to the regulator an application bid to acquire six Ukwala stores.

Nakumatt has five branches in the CBD, rivals Naivas and Uchumi have two branches each while there are several other private retailers operating within the CBD.

CAK director-general Wang’ombe Kariuki, however, put Tuskys’ plans on ice, ruling that they could only acquire Ukwala’s Jogoo Road branch but not the ones on Hakati Street, Ronald Ngala Street and another along Haile Selassie Street.

Two branches on Tom Mboya Street — Tom Mboya and Hyper — were also excluded.

When launching its maiden store in Narok in August, Tuskys’ management announced that it was seeking to grow the business into a regional retailer as well as ensuring that they have presence in the all 47 counties locally.

Mr Leparachao told the Business Daily that these plans are still on course, despite the ongoing court battle. Other than setting up 10 new stores in the next six months, he says the supermarket’s management is assessing Ethiopia and Rwanda with a possibility of them making its maiden foray into these two countries in 2015.

“We shall be exploring our opportunities in Ethiopia and Rwanda and hopefully we can set up base in this year,” he said last week.

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