Uchumi Supermarkets on Wednesday sent home 900 staff in Uganda and Tanzania after closing 11 loss-making outlets.
The retail chain said the decision was made to cut losses as the affected branches had been relying on revenue generated by Kenyan outlets to finance their operations.
Tanzania had six outlets while Uganda had five.
“Our outlets in Uganda and Tanzania make up only 4.75 per cent of our operations yet they account for over 25 per cent of our operating costs. The two subsidiaries have not made any profits over the past five years which means they have been draining the parent operations,” Uchumi chief executive officer Julius Kipng’etich said in a statement on Wednesday.
“We are confident that we can now concentrate on turning around Uchumi by focusing on the 95 per cent of the business that makes money for shareholders and are optimistic that we will achieve this within the shortest time possible,” added Mr Kipng’etich.
Uchumi had hired a Nairobi-based company Hipora Business Solutions East Africa to investigate theft by staff in Uganda and Tanzania and identify the retailer’s prospects of surviving in both markets.
The retailer plans to enter into agreements on how it will repay debts owed to suppliers in both countries.
Uchumi has also turned to selling its prime assets in Nairobi, among them its Ngong Road hypermarket and its 20-acre land in Kasarani to raise money to pay its suppliers.
It said the closure of its outlets in two regional markets will help the retailer stabilise its Kenyan operations.
Mr Kipng’etich said the retailer had already informed industry regulator, the Capital Markets Authority and the Nairobi Securities Exchange on the decision to close down its regional outlets.