Uchumi records Sh1bn pre-tax loss in six months amid declining sales
Uchumi Supermarkets outlet in Nairobi's central business district. PHOTO | FILE
Uchumi Supermarkets has announced a pre-tax loss of Sh1 billion in the half-year ended December, widening the negative earnings of Sh262.3 million reported a year earlier.
The company did not disclose its net loss position in its statement of accounts sent to the Nairobi Securities Exchange.
The retail chain’s net sales declined 37.5 per cent to Sh4.2 billion, with cost of goods sold also falling by a similar margin to Sh3.3 billion.
Uchumi’s expenses however increased 11.7 per cent to Sh2 billion. The retailer is looking for a strategic investor to take a controlling stake in exchange for a Sh5 billion capital injection.
Funds from the new investor are expected to help pay down the retailer’s debts and fund its ongoing operations as it seeks to reverse the losses in a fiercely competitive retail sector.
Its current liabilities, including a bank overdraft, increased to Sh6 billion from Sh5.1 billion. Uchumi says the cash may be raised in the form of equity or convertible debt and even a combination of both, a move that could result in a major dilution of current shareholders.
The new investor may assume a controlling or majority ownership of the retailer.
The Sh5 billion cash infusion is more than double the company’s market capitalisation of Sh2.2 billion.
Uchumi’s share price has lost 42 per cent over the past one year to trade at Sh6.1 apiece. The entry of a deep-pocketed investor could see the crop of current shareholders take a large dilution, with the transaction having the potential of effecting a boardroom change at the retailer.
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