Business / Markets
Wednesday, 15 Jun 2016 07:53 EATdkiraka@kenyafreepress.com
Uchumi Supermarkets has suffered another setback towards it recovery after its Chief Operations Officer Willy Kimani left the firm to rejoin rival Naivas where he served in the same capacity before taking up the Uchumi job.
Kimani has resigned just eight months into the job, saying that while Uchumi was on the right track, it did not offer him an opportunity to grow and that he would be more challenged at Naivas.
Kimani had been handpicked by Uchumi's new CEO Julius Kipng’etich from Naivas as head of marketing, ICT and business development and was eventually appointed COO in the hope that his vast experience in the retail business would aid Uchumi’s recovery.
The exit of Kimani has left the Uchumi outlet management in a quagmire in its effort to turn around the struggling supermarket’s fortunes which have been dwindling over the years owing to accumulated debts and stiff competition from other retailers like Tuskys, Naivas, and Nakumatt.
Uchumi has been struggling to stay afloat, closing down some of its branches and laying off staff in a bid to cut costs. Despite being listed in the Nairobi Securities Exchange, the retail trader has been grappling to return to profitability since suffering from mismanagement and more especially financial iimpropriety.
In 2006, Uchumi, then the largest chain retailer in Kenya, was placed under receivership after accruing outstanding debts. The government injected Sh700 million to revive it. Since then, Uchumi has never regained its footing.
The problems in Uchumi have largely been blamed on its former staff, who formed companies that supplied substandard products to the supermarkets, thus losing its consumers to other outlets. Subsequently the retail was forced to take large amounts of loans to pay off its suppliers.
Immediate former chief executive Jonathan Ciano, who was reputed to be a turnaround manager, presided over a long period of rosy accounts, but his tenure plunged the company into even deeper waters. An audit into Ciano’s tenure carried under Kipngetich’s reign recently revealed that the former CEO had Uchumi contract his own companies for the supply of commodities.
Last year, Uchumi raised Sh896 million through a rights issue but the expenditure on it has not been accounted for.
Kipng’etich has however remained optimistic over the recovery of the supermarkets, with talks on May 20th with suppliers having resulted in the suppliers agreeing to turn the Sh1.8 billion debt owed to them into equity.
Kipng’etich has also handed in a request to the cabinet secretary of Finance, Henry Rotich requesting for Sh1.2 billion to pay off the remaining part of the Sh3.6 billion debt it owes. The rest will be raised by the sale of some of their retail outlets including Ngong Road branch and land in Kasarani and Lang’ata.
Kimani’s exit come just a week after Jamii Bora Bank, an SME lender, regretted their Sh500 million investment in Uchumi. The bank’s chief executive Simon Kimani said that the information memorandum used to entice them to buy shares in the stores did not reflect the reality of the situation.
The bank had acquired substantial shareholding in Uchumi in a bid to take advantage of the opportunities Uchumi offered of access to 800,000 customers, a supply chain of 2,000 suppliers and 40 branches countrywide. However, Uchumi has been closing down its branches, leaving the bank in a frustrated.