Uchumi sinks into red but confident of east Africa expansion

Kenya’s Uchumi Supermarkets Ltd posted a mid-year pretax loss after investing in new branches but said it was confident its expansion strategy in east Africa would soon pay off.

A rise in staff costs and higher rental prices, including on stores which are yet to open, led into a pretax loss of KSh262 million ($2.9 million) for the half year to December 31.

Uchumi had posted a profit of KSh106.9 million for the period a year earlier.

Net sales slipped to KSh6.8 billion from KSh7.3 billion, partly due to an economic slowdown in Uganda and greater insecurity.

Uchumi, which currently operates 37 stores in Kenya, Uganda and Tanzania, raised KSh895 million ($9.77 million) through a cash call last month to boost its working capital and to support expansion.

“The outlook into the second half is positive as we plan to grow our retail network by ten more branches across the region as the earlier-opened branches reach their maturity,” CEO Jonathan Ciano said in a statement on Saturday.

“The economic environment is also expected to record recovery,” he said.

Uchumi hopes its expansion will help it capture the growing number of middle class spenders in the region.

Al Qaeda-linked militants attacked an upscale shopping mall in the Kenyan capital in 2013, killing at least 67 people.

Uchumi did not have an outlet in the Westgate mall but some customers remain wary of shopping in malls or supermarkets.