Uchumi closes five more branches, sacks 253 employees

Uchumi Supermarkets has shut down five branches as part of an on going restructuring program.

The non-performing outlets shut down were located at Taj Mall in Nairobi, Kisii, Nakuru, Eldoret and Embu. As part of the cost cutting measure, Uchumi has also laid off 253 employees in the process.

From a workforce of over 2,000 in 2015, the number has now dropped to 1,527 employees.

The retailer’s Chief Executive Dr Julius Kipng’etich said the move will reduce operational costs, freeing the company up to focus on getting back to profit making position.

“Their closure will enable us channel our resources to fewer branches and optimize operation for maximum gain,” Dr Kipng’etich said.

The closure of the five branches leaves Uchumi with only 20 branches to operate. Late last year the retailer closed its branches in Maua and the Syokimau train station.

The move is expected to save the retailer Sh40 million a month.

Dr Kipng’etich has in the past faulted the previous management team led by Jonathan Ciano for uncontrolled expansion that lacked proper strategy to support the strategy.

In October 2015, Uchumi announced the closure of its loss making subsidiaries in Uganda and Tanzania. The subsidiaries accounted for 4.75 per cent of the retailers operations, but constantly required monthly injection of cash to keep them operational.

Uchumi has been facing stiff competition in the market.  Underperformance and a heavy debt burden have worked against the retailer even as it seeks to bounce back from its loss making position. Uchumi announced a Sh1 billion half year pre tax loss with sales down 37.5 per cent to Sh4.2 billion.

Uchumi is also in a negative equity position, with its Sh6.2 billion debt outstripping its Sh6.1 billion asset base.

Dr Kipng’etich in October announced plans to sell its Lang’ata Road and Ngong’ Road hypermarts to free up cash.

Additional reporting by Leah Ngechu