Uchumi has reported a net loss of Sh547 million in the period under review compared to Sh1.01 billion in December 2015.
The shrinking topline also comes after Uchumi last year closed five outlets in Kenya and shut down operations in Uganda and Tanzania.
Uchumi’s finance costs more than doubled to Sh121.7 million from Sh52.9 million in the half year to December 2015, an indicator that the supermarket was relying on expensive short term credit for working capital.
Uchumi Supermarkets is banking on a taxpayer-funded bailout and sale of stake to a strategic investor to pull out of the red after halving losses in the six months to December even as sales tumbled by more than two thirds. The Nairobi Securities Exchange-listed retailer reported on Tuesday a net loss of Sh547 million in the period under review compared to Sh1.01 billion in December 2015.
Sales tanked to Sh1.3 billion in the half-year period, from Sh4.2 billion a year earlier, which management attributed to stock outs after suppliers cut deliveries due to mounting pending bills.
“The sales were significantly impacted by a lack of optimal stock levels due to delays in funding,” Uchumi chief executive Julius Kipng’etich said in a trading update.
“The board and management continue to pursue strategies aimed at stabilising the company’s performance including the sale of non-core assets, sourcing for a strategic investor, building supplier confidence.”
Treasury secretary Henry Rotich in December lined up a Sh500 million bailout package for Uchumi, but lawmakers are yet to pass the supplementary Budget he tabled in Parliament.
The government owns 14.67 per cent of the loss-making Uchumi and is the second-biggest shareholder behind tier II lender Jamii Bora Bank, which controls 14.90 per cent of the retail chain.
Uchumi had in August last year suspended indefinitely plans to raise Sh5 billion from a strategic investor, after it slid into a negative equity position.
The supermarket chain has hired Pamoja Capital to help guide the search for a deep-pocketed investor to put in up to Sh5 billion in exchange for a controlling stake.
“We believe the successful acquisition of a strategic investor and sale of non-core assets will offer the chain some impetus to drive business growth albeit at a slower rate,” said analysts at Co-op Bank-owned Kingdom Securities.
The shrinking topline also comes after Uchumi last year closed five outlets in Kenya and shut down operations in Uganda and Tanzania.
Uchumi’s finance costs more than doubled to Sh121.7 million from Sh52.9 million in the half year to December 2015, an indicator that the supermarket was relying on expensive short term credit for working capital.
Operating expenses halved to Sh1.1 billion in the period under review due to cost cutting measures such as closure of stores and laying off 253 workers in Kenya.
The retailer last year sold the Ngong Road branch for Sh1 billion and used the proceeds to reduce a loan owed to KCB Group.
Uchumi is also fighting in court to keep a 20-acre piece of land in Nairobi’s Kasarani that a group of squatters has also claim to own.
The retailer’s shares yesterday shed Sh0.10 to close at Sh2.60 apiece, and has so far lost 32 per cent of its value since beginning of this year – making it the worst performing counter at the Nairobi bourse.
Kenyan retailers are facing strong headwinds related to high leasing costs to keep prime locations, finance costs and mounting supplier dues that has resulted in stock outs and throwing some players into the red.
Nakumatt, Kenya’s biggest retailer, has also admitted challenges settling supplier dues, and is currently also reporting stock outs.
It has closed the Ronald Ngala branch due to low sales. Tuskys has shut down its outlet along Nairobi’s Sheik Karume Road.
PAYE Tax Calculator
Note: The results are not exact but very close to the actual.
