Sales at troubled retailer Uchumi Supermarkets plunged to 0.5 percent of the revenues the once giant retailer posted a decade ago, reflecting the decline of the company.
Disclosures by Mazars Consulting Ltd, which has been supervising a debt settlement plan between Uchumi and its creditors, show that the retailer reported sales of just Sh65.45 million in the year to June 2024, a far cry from the annual turnover of Sh14.5 billion it reported at its peak in June 2014.
In 2014, Uchumi rode on an expansion blitz that saw it operate about 40 outlets in Kenya, Uganda and Tanzania to record its highest ever sales, which yielded a net profit of Sh364.6 million and left the company with a healthy shareholder equity of Sh3.34 billion.
Mounting losses and debt have, however, wiped out the shareholder funds, leaving Uchumi with a negative equity of Sh5.92 billion as at December 2024.
Uchumi now operates just two outlets at Langata Hyper and Unicity near Kenyatta University.
It closed down 24 branches between 2015 and 2018 as it sagged under mounting debt and losses, before opting to sell a piece of land it owned in Nairobi (held under a subsidiary known as Kasarani Mall Ltd) for Sh2.8 billion in late 2018 to raise funds to pay creditors and save its remaining branches.
The creditor payment plan—known as a Company’s Voluntary Arrangement (CVA)— was, however, held up after the Kenya Defence Forces (KDF) claimed ownership of and occupied the land from January 2019, intending to put up a housing estate for military personnel.
“The CVA plan was to be financed with the sale of 20 acres of KML property at a cost of Sh2.8 billion. However, following the illegal occupation by KDF of a part of the property, the company was unable to dispose of the property and therefore could not implement the CVA plan,” Mazars told the Uchumi creditors in a meeting on Monday.
“Due to the inability of the business to achieve funding through the sale of KML property, the business was forced to shut down all its branches except Langata Hyper.”
The proposal by Uchumi for a CVA was triggered by an insolvency petition that was filed against it in 2018 by Githunguri Dairy Farmers Cooperative Society Ltd, which sought liquidation orders against the supermarket after it failed to make a payment for dairy supplies.
To finance the CVA, Uchumi entered into an agreement to sell the Kasarani land to Jewel Complex, a commercial arm of the Jesus Winner Ministry of Roysambu, which put up a deposit of Sh330 million towards the purchase.
Following the KDF’s occupation of the property, Uchumi and the church negotiated an agreement that saw Jewel Complex take up three acres after converting its deposit into a purchase price, with the KDF maintaining its possession of the remaining 17 acres.
The dispute between Uchumi and the KDF remains in court, even as the latter continues to put up houses on the property.
Meanwhile, the Sh330 million raised from the Jewel sale was used to pay off part of the creditor dues, according to the Mazars report.
In the meantime, Uchumi opened its Unicity outlet in September 2024, with the retailer leaning on a bakery at the outlet to grow sales.
At the Langata Hyper, Uchumi’s plan was to convert the outlet into a mall and bring in tenants for rental income. The plan has, however, been complicated by a court dispute with one previous tenant, a restaurant known as Hotspot, even though Uchumi has been able to bring in 10 others into the outlet.
“The latest tenant, My Home Superstore Ltd, trading as China Square, occupies approximately 60,000 square feet as per the lease agreement and opened its doors to the public on June 15, 2024,” said Mazars.
“The monthly rental inclusive of the service charge is Sh5 million. This will ensure the financial viability of the property.”
Uchumi has also set up a temporary container shop of approximately 1,000 square feet outside the Langata Hyper outlet, with the company saying that it has spent Sh8 million in stocking the shop.
