Uchumi Supermarket #ticker:UCHM posted a 39 per cent improvement in its loss-after-tax position in the financial year ended June due to what it termed as “improved cost management” that helped it to improve its margins.
The retailer recorded a Sh1.7 billion loss after tax during the year, compared to a Sh2.8 billion in the previous year.
Over the last year, Uchumi slashed its branch network regionally and in Kenya to just 20 outlets. This hurt its net sales, which dropped 60 per cent to Sh2.6 billion, while improving its margins.
The company’s auditors gave it an unfavourable opinion, citing inability to conclusively compare last year’s financial record to 2016’s after Uchumi’s outlets in Uganda and Tanzania were shut down.
Uchumi CEO Julius Kipng’etich said the reasons for a qualified statement from its auditors was due to difficulties in getting information from its regional subsidiaries, which are under liquidation.
“They (auditors) know that the money is coming and they know that the investor is being processed,” Kipng’etich told the Business Daily, referring to an impending deal between Uchumi and a strategic investor who had pledged to pump in Sh3.5 billion for a stake.
The struggling listed retailer is expecting a Sh700 million from its main shareholder, the government, to be released soon to shore up its operating capital. The loan is the second tranche in a Sh1.8 billion bailout facility from the state, of which Sh500 million was drawn in January this year.
“We are getting shareholder loan from the Kenyan government for the high season. Once that comes through anytime now (it) will boost as we finalise with the investor,” he said.
There were also asset write-offs during the financial year that made it difficult to compare the two years, the auditors said in their opinion.
Uchumi postponed its full-year results release by over a month in what it said was “to allow the company enough time to finalise aspects of the audit process.