Speculators are taking a big bet on the Uchumi Supermarkets share price despite the company’s financial woes, branch closures that have wiped out sales, and inability to service historical debt to suppliers and banks.
Trading data from the Nairobi Securities Exchange (NSE) shows that the retailer’s stock is the most traded in the commercial and services segment of the market, ahead of firms like Kenya Airways (KQ), TPS Eastern Africa and WPP Scangroup.
Investors have traded 31.2 million Uchumi shares in 2025, ahead of Kenya Airways’ volumes of 25.4 million shares, despite the airline having more issued shares (5.68 billion) compared to the retailer (364.96 million).
At its peak in 2014, Uchumi operated 40 branches across Kenya, Uganda, and Tanzania. However, by 2018, it had closed 24 as it grappled with mounting debt and losses. Further closures have meant that Uchumi now operates just two branches: Langata Hyper and Unicity near Kenyatta University.
This has seen annual sales plunge to Sh65 million for the year ending June 2024, compared to Sh14.5 billion in 2014, the last time the retailer turned in a net profit of Sh364.6 million.
Uchumi tried to raise funds to repay debt from the sale of a 20-acre piece of land in Nairobi’s Kasarani area for Sh2.8 billion but lost the property to the Kenya Defence Forces (KDF), which claimed historical ownership.
“This is a case of people playing with the margins of the share price, hoping to take advantage of price movements in a generally positive stock market to extract a gain,” said Melodie Ndanu, an analyst at Standard Investment Bank.
“It is a risky gamble, seeing that they are dealing with a company that is disposing of assets to pay creditors, leaving a question of whether there will be any value left for shareholders at the end, and whether the company will be able to continue as a listed entity.”
The Uchumi shares that have changed hands this year are also more than the 18.32 million traded in the whole of 2024, highlighting the increased speculative trading on the stock whose low nominal share price of Sh0.35 has attracted investors looking for quick gains.
Demand for shares
The demand for the shares from speculators has also fuelled a share price rally of 106 percent on the stock in the period.
While Uchumi remains an actively traded stock on the NSE, the company has been struggling to conclude a creditor payment plan—known as a Company’s Voluntary Arrangement (CVA)— which was to be financed using the Kasarani land sale.
The KDF took over the property in January 2019, weeks after Uchumi had inked a sale agreement with Jewel Complex, a trading arm of Roysambu-based Jesus Winner Ministry for the property.
The retailer later managed to negotiate the sale of three acres to Jewel Complex for Sh310 million, which was used to partially settle some debt claims.
Mazars Consulting Ltd, the firm overseeing the CVA, told Uchumi creditors in a meeting on Monday that the retailer blames the spat with the KDF over the remaining 17 acres for its inability to service the CVA, and the closure of its remaining branches.
The KDF has already started the construction of staff residential houses on the land.
Uchumi has also seen its shareholder equity turn negative to the tune of Sh5.92 billion by December 2014, compared to a positive position of Sh3.34 billion in June 2014.
A negative equity position, which occurs when liabilities exceed assets, means that in case of liquidation of a company, shareholders would not receive any of the consideration. It also ideally calls for the shareholders to inject funds into the company to return it to a sound footing.
This has, however, not stopped people from taking a punt on the Uchumi share, likely hoping for gains in a market where small firms have led in price gains.
Penny stock
Some of the firms on which the investors are taking a bet this year have been trading in penny stock territory for a prolonged period due to years of poor financial performance and governance issues, raising concerns that it is uninformed speculators who are driving unsustainable gains and risking losses down the road.
Most are hoping to replicate the big gains of between 90 and 283 percent on East Africa Portland Cement (EAPC), Kenya Power, Kenya Orchards, I&M Group, KCB Group and KenGen in 2024.
These firms’ gains were, however, driven by improved profits which saw them resume or issue higher dividends.
