2 Factors That Will Determine Uchumi Supermarket’s Survival

The survival of Uchumi Supermarket #ticker:UCHUM will be determined by two things — how fast the retailer secures the signature of a strategic investor as well as a buyer for its 20-acre Kasarani land.

The retailer has had a tough past 12 months, with shop closures, empty shelves as well as disgruntled and unpaid workers being some of the challenges it has endured.

Suppliers cut ties, irked by unpaid debts amounting to hundreds of millions of shillings. Its rival Nakumatt, once the regional leader in the retail business, did not fare better either.

Uchumi’s year has however ended on a high note following the receipt of Sh700 million from the government, allowing the business to restock its branches and pay some of its outstanding debts. Andrew Dixon, the retailer’s recently appointed chief operating officer, is optimistic that Uchumi will have cleared its debts by the end of March, normalising operations.

“I am optimistic about our continued return of the brand to its former glory. The restocking we have been conducting recently is not a seasonal affair; we are building towards a sustainable business going forward,“ he said.

Mr Dixon added that the bailout by the Treasury helped it clear its workers’ two-month unpaid salaries and restore relations with about 200 of its suppliers who had fled. Uchumi has also recently restocked 19 out of its 20 branches across the country with the intention of riding on the festive season to make a comeback in the market.

The retailer’s long-term prosperity however rests on how fast they receive the Sh3 billion from the sale of its Kasarani land, with Mr Dixon indicating that the business has secured a “willing buyer.”

The land, which is located on Thika highway has, however, been a subject of protracted court battles between the retail chain and squatters who claim ownership.

In September, a court declared that the retailer was the legal owner of the land. Another Sh3.5 billion is expected from an unnamed investor. If successful, Mr Dixon said, the business will be firmly on the road to recovery.

“The investor is progressing with due diligence. We expect fresh funds by the end of January or thereabouts. That coupled with the potential sale of Kasarani means that we should be in a good financial position by the end of March 2018,” he said.

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