Workers’ union says non-payment of salaries has affected the retailer’s 1,355 employees.
Uchumi has struggled to raise new capital to fund its operations, even as it fights closure of branches and frequent stock-outs.
Uchumi hired Mr Dixon, an ex-Tesco executive, as its new COO late last year as part of a turnaround effort that has been paralysed by a lack of funds.
Employees of Uchumi Supermarkets #ticker:UCHM have gone without pay for three months, signalling a deepening of the retail chain’s crisis since its chief executive jumped ship last November.
The workers’ union said non-payment of salaries, which began in December, has affected the retailer’s 1,355 employees.
Uchumi has struggled to raise new capital to fund its operations, even as it fights closure of branches and frequent stock-outs.
“We are asking the government to come in and save the workers who are suffering,” said Kenya Union of Commercial, Food and Allied Workers (Kucfaw) secretary-general Boniface Kavuvi. Uchumi bosses, including board chairperson Catherine Ngahu, chief operating officer (COO) Andrew Dixon and acting chief executive Mohamed Mohamed did not respond to queries on the workers’ salaries.
The retail chain, which is suffering under heavy debtload, owes suppliers and landlords billions of shillings.
Uchumi hired Mr Dixon, an ex-Tesco executive, as its new COO late last year as part of a turnaround effort that has been paralysed by a lack of funds.
Mr Dixon, who until his Uchumi posting was Nakumatt’s chief marketing officer, said his priority would be to restock the retail chain’s outlets and reclaim its brand upon receipt of fresh capital.
Looking for CEO
Uchumi is still hunting for a substantive chief executive following Julius Kipng’etich’s abrupt exit last November.
Dr Kipng’etich, whose two-year contract expired in October last year, joined Uchumi from Equity Group in August 2015 after its former CEO, Jonathan Ciano, was fired along with three senior managers for mismanagement.
Uchumi has posted a series of losses in the past three years and has struggled to recover since it first went into receivership in mid-2006.
The retailer came out of receivership in January 2008, riding on a Sh675 million bailout loan from its principal shareholder, the government.
Mr Dixon said recapitalisation of the business would enable him to motivate the employees whose pay had been delayed on several occasions.
The rescue plan now appears to have run into strong headwinds after Uchumi failed to conclude the sale of a prime piece of land it owns in Kasarani in Nairobi, prompting it to consider staff reduction.
Uchumi last December announced it was betting on the sale of the Kasarani plot to finance a comeback bid that had started in earnest with the restocking of its stores countrywide.
Mr Dixon said the land, valued at Sh3 billion, had attracted competitive bids that were expected to come through in due course.
The retailer has since released internal communication signalling that the rescue plan is facing obstacles.
“This is to advise that management is still in discussions with our Kasarani land buyer. These discussions have been more protracted than we had thought but the news is that they are still ongoing,” said Mr Mohamed, in a memo to staff dated March 6.
Mr Mohamed told workers that Uchumi now plans to engage financial institutions to procure some funds to offset the arrears.
“Payment of salaries is a priority and we are planning to use funds from the land sale to settle the arrears,” Mr Mohamed said in his memo.
The retailer had earlier said proceeds from the land sale would be used to settle part of the huge debts, including money owed to suppliers and landlords.
On February 27, Uchumi revealed a silent plan to lay off an unnamed number of its workers as it sorts out its financial difficulties. The plan was, however, fiercely opposed by the workers’ union.
Uchumi’s net loss in the half year ended December 2017 widened 63.5 per cent to Sh895.1 million, saddled by a sharp sales drop.
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