Uchumi Supermarkets has braved a double-digit sales drop in its Uganda operation and a general slowdown in Kenya’s retail market to report Sh384 million in profit after tax for the full year ended June 30 this year.
This is up 7.6 per cent over the previous year thanks to strong growth in Tanzania and marks the eighth year in the black since the retail chain reopened its doors after facing bankruptcy.
The chain, however, says tenancy mix and infrastructure challenges may see it move some of its Uganda outlets to “more promising locations” in the next 12 months. The chain closed its outlet in Kampala's Freedom City Mall last week.
According to extracts of their audited results released Monday, total net sales edged up one per cent to Sh14.45 billion (2013: Sh14.36 billion) with gross profit falling 6.8 per cent to Sh453 million from Sh486 million. The firm’s tax charge for the year was halved from the previous period's Sh129 million to just above Sh68 million.
“Growth was partly adversely affected by spill-over effects of the March 2013 general elections in Kenya (and) incidents of insecurity mainly attributed to terrorism across East Africa,” chairperson Khadija Mire and chief executive Jonathan Ciano said in a commentary provided with the results. These factors were also cited by the country’s leading supermarkets chain, Nakumatt, which bore a direct hit to one of its outlets during the 2013 Westgate mall attack.
“Total group sales registered marginal growth… mainly due to the drop during the year in the Uganda subsidiary by 12 per cent,” the Uchumi board members say.
The drop is attributed to competition, supply chain challenges and trouble at some locations “which may lead to our divestiture and relocation in the coming financial year to more promising locations already identified”.
Tanzania sales, on the other hand, grew by ten per cent compared to the previous year, while Kenya registered a two per cent growth in sales.
Uchumi also pointed to insufficient rains, high bank borrowing rates and challenges related to Euro debt and the new constitutional dispensation as factors that affected their performance.
During the 2013/14 financial year, eight new branches opened in green sites bringing the chain’s total branch network to 37 outlets (27 in Kenya, four in Tanzania and six in Uganda).
A Government of Kenya loan advanced during receivership in 2006 to help revive Uchumi was fully settled upon paying the last installment of KShs31 million on June 30, 2014.
The board has recommended a first and final dividend of KShs0.30 per ordinary share for approval by the shareholders.