Uchumi loses second branch in three months

Uchumi Supermarkets #ticker:UCHM is set to lose its second branch in three months, accelerating the cash-strapped retailer’s decline.

The retailer’s Meru branch landlord, City Square Properties Limited, have sued Uchumi claiming Sh23.8 million in rent arrears stretching for over 21 months.

City Square Properties filed the petition at the High Court on March 21 joining the winding up petition by Githunguri Dairy Farmers Co-operative Society and over 20 other companies.

City Square Properties is seeking to have the lease terminated accusing the retailer of failed to stick to the agreement.

“The respondent is in arrears in respect of the said business premises erected in Meru County for over 21 months and the said rent arrears now stands at over Sh23.8 million as at February 2019, the applicant therefore continues to incur financial losses on account of lost respect in respect of a lease…,” says City Square Properties said in a document filed at the High Court and seen by the Business Daily.

Lack of stock

Uchumi has since a fortnight ago closed the branch due to lack of stock and a clash with employees who have gone unpaid for months, but the management has maintained that they are still in business.

The Meru branch is the second outlet to close since December last year after the retailer lost its flagship Ngong Hyper store. The struggling retailer’s CEO Mohamed Mohamed told the Business Daily in December that Uchumi still holds the building tenancy and the shutdown is short-term.

Uchumi, which owes suppliers over Sh3.6 billion, has been banking on the sale of the land to turn around its fortunes but the money has been slow in coming because of challenging approval processes. Over the past four years, the retailer’s branch count has dropped from about 40 to less than 10 owing to its cash woes.