Kenya's Uchumi expects return to profit growth within a year

Kenya's Uchumi Supermarkets , which fired its top managers in June, will shift to renting outlets instead of owning them and expects to return to profit growth within the next year, its chief executive said.

Uchumi, which operates 37 stores in Kenya, Uganda and Tanzania, slumped to a pretax loss of 262 million shillings for the half year to Dec. 31 and said in late August its full-year earnings were expected to fall by at least 25 percent from the previous year.

Julius Kipng'etich, a former chief operating officer of Equity Bank, was appointed in August to help revive the chain after it fired its previous head.

Speaking to reporters on Wednesday, Kipng'etich said Uchumi will focus on reorganising the management of underperforming branches, or would in extreme circumstances close or relocate those branches.

He forecast the company would be stabilised in his first 100 days in office and would return to profit growth between the next six months and a year.

To help cut expenses, Kipng'etich said the company will move to renting space when it opens new outlets. "We will try to avoid fixed costs like a plague," he said.

Turning to the company's upheavals earlier this year, when former CEO Jonathan Ciano was ousted along with the chief finance officer after the group fell behind on supplier payments, he said the matter was in the past, without making further comment.

The company, which said in June when it announced Ciano had been fired that it was conducting an audit to see how cash from a rights issues was spent, is still awaiting the outcome of that audit.