Nakumatt admits facing cash flow challenges

Retail chain Nakumatt Supermarkets is experiencing difficulties in paying suppliers and keeping some of its outlets well stocked, which it said have been due to cash flow challenges.

The retailer, which is the largest in the region, said a harsh operating environment had triggered what it termed as transient challenges.

"Like any other business operating in this market, Nakumatt Holdings has faced a number of unforeseen challenges. These challenges range from a depressed economy, higher operating costs and extraneous factors including enhanced risk management due to prevailing security threats," said Nakumatt Holdings Managing Director Atul Shah in a statement yesterday.

"As expected, these factors have impacted on the operations on many fronts, including cash flow."

Shah was reacting to reports that the chain was facing difficulties including paying suppliers on time, stock outs of key products throughout its outlets and that it planned closing some of its outlets.

Among the measures it said it had taken is financial restructuring. The firm has in the past sought strategic partners who were expected to, among other things, inject capital into the business but later settled for bank loans.

It is currently in talks with financiers, which it said would be concluded in coming days. While it was not specific on the details of the talks with the financial institutions, the retailer alluded to having its current debts being bought out. It expects this to give it access to substantial credit at more friendly terms.

"We are currently engaging a number of local and international financiers who have expressed an interest in providing financing facilities on mutually beneficial terms. We are conscious that such financial restructuring remains a key imperative thus our focus on cheaper, long-term solutions, which are aligned to the overall business strategy," said Shah in the statement.

"With the ongoing financial re-engineering engagements focused on accessing a significant capital injection, we are confident that the overall debt will further reduce once the process is concluded in the coming days. The facility will help retire existing funding tools including bank loans and related debts."

Despite the challenges, Shah said the retailer would continue on its expansion plans in Kenya and the region. Nakumatt has more than 60 outlets across Kenya, Uganda, Rwanda and Tanzania. "The process will allow us to regain our footing with full supplier settlements and sustainably continue aggressive expansion plan," said Shah.