Companies

Tuskys bars Naivas from taking over Greenspan space

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Tuskys supermarket Greenspan Mall branch in Nairobi. PHOTO | SALATON NAJU | NMG

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Summary

  • Tusky has failed to surrender the premises derailing Naivas, which had announced its intention to open the Greenspan store in May.
  • Tuskys until recently Kenya’s top retailer with 53 stores, has withered to less than 10 outlets operating amid stock-outs.
  • The location at Greenspan Mall owned by ICEA Lion Asset Management’s Stanlib at the heart of the populous Eastlands is strategic for Naivas potentially giving it a huge customer base.

Tuskys supermarket has prevented rival Naivas from replacing it at Donholm Greenspan Mall after the cash-strapped retailer declined to surrender the premises.

The owners of the mall auctioned Tuksy’s goods for non-payment of Sh25.9 million in rent in November last year, paving the way for Naivas to open a store at the shopping complex.

But Tusky has failed to surrender the premises derailing Naivas, which had announced its intention to open the Greenspan store in May.

The court has now allowed Greenspan owners, Stanlib’s Fahari iReit trust, to sue Tuskys for the surrender of the lease and stopped the landlord from seeking the remainder of its rent areas to allow an insolvency petition to proceed.

“Greenspan states that following the distress the company abandoned the premises,” High Court Judge Francis Tuiyott said.

“I am urged by Greenspan to allow them to commence court proceedings against the company to compel the execution of the surrender. And I see no reason not to do so,” he said.

Tuskys until recently Kenya’s top retailer with 53 stores, has withered to less than 10 outlets operating amid stock-outs.

The retailer has been losing employees, stores, customers and suppliers as its cash troubles worsened with total debts, including bank loans, in excess of Sh10 billion and lenders having cut fresh credit lines.

In its place, Naivas has been rising targeting locations held by former rivals Tuskys and Nakumatt after the two supermarket chains collapsed leaving vacant prime locations.

The location at Greenspan Mall owned by ICEA Lion Asset Management’s Stanlib at the heart of the populous Eastlands is strategic for Naivas potentially giving it a huge customer base.

Naivas eyes the mall as an opportunity to provide Eastlands shoppers the Naivas food market experience.

The retail chain wanted to use the 57,000 square feet at the mall’s ground floor at Greenspan mall for a food market, focusing on fresh produce as well as electronics and general merchandise.

Naivas has grown to become the leading retailer from the fourth largest supermarkets in just under a decade.

The retailer gained financial muscle to fire the growth after it signed last year an agreement with France-based private equity (PE) fund, Amethis Finance to sell a 30 percent stake.

Its expansion drive and battle for more market share has seen grow its footprint across the country to 74 branches ahead of QuickMart’s 46 stores.

It's closest rival QuickMart which increased its spending power after a merger with Tumaini Supermarkets owner Sokoni Retail Kenya has also been on an expansion binge.

The two retailers have been spending heavily to expand, seeking to fill voids left by collapsed and beleaguered supermarkets.

Tuskys, for instance, has been rapidly shutting stores over the past few months on the back of a heavy debt and insufficient working capital.

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