Uchumi clears Sh500 million debt to suppliers

Retail chain Uchumi Supermarkets says it has so far cleared Sh500 million debts owed to its suppliers as part of its turnaround plan that involves restocking its shelves.

The retailer has in recent months suffered low supply of commodities in most of its branches after traders stopped deliveries due to unpaid debts.

The sour relations with suppliers had seen customer traffic to its branches fall sharply, ceding market share to its main rivals such as Nakumatt, Tuskys and Naivas supermarkets.

“What we have done is enter into arranged payments with the suppliers to reduce the backlog of debts and ensure there is adequate supplies in our outlets. This has really helped the suppliers understand our commitment to them,” said Willy Kimani, Uchumi chief operations officer (COO), in an interview.

“We are very pleased to see our suppliers beginning to do business with us again and are confident that ongoing engagement with them will see more of them coming back,” he added.

The Nairobi Securities Exchange-listed retailer has also committed to pay for new supplies on an ongoing basis.

“Our shops are now at over 80 per cent of the desired stock levels and we are working very hard to get this to optimal capacity,” said the COO.

Uchumi Supermarkets’ debts to suppliers stood at Sh1 billion when former chief executive Jonathan Ciano was sacked for what the board termed as gross negligence.

The retailer plans to have completed refurbishing its stores by November. The upgrade started off with Sarit Centre Hyper in Westlands, Nairobi.

READ: Uchumi hires HR firm to probe theft by employees

Association of Kenya Suppliers chairman Kimani Rugendo on Monday confirmed that “a good number of suppliers” had been paid while the remaining the ones have entered into a special agreement with the retailer.

“Those who had stopped supplying to Uchumi Supermarkets have already come back. If this continues, it could attract more suppliers and shoppers and this could boost its recovery,” said Mr Rugendo.

Uchumi Supermarket’s slump into losses was blamed on poor management, with top managers facing conflict of interest accusations, including supplying goods to their employer.

The Uchumi board has now banned managers and directors from supplying the supermarket goods and services and instead opted to buy all goods directly from manufacturers.

Uchumi has a workforce of about 4,500 across its 39 branches in Kenya, Uganda, Tanzania and Rwanda.

The supermarket is currently evaluating the performance of all its outlets with an intention to shut down non-performing branches in a bid to cut down on operating costs.

In a reorganisation strategy, Uchumi Supermarket’s board members have made changes to its executive suite in which it has hired Julius Kipng’etich as its new chief executive from Equity Bank where he held the position of chief operating officer since 2012.

It also recruited Mr Kimani, former Naivas Supermarkets business development and marketing manager to be its chief operations officer.