Uchumi's losses now grow to Sh895 million

Listed retailer Uchumi Supermarkets has announced a 63 per cent increase in losses during the first half of the current financial year.

The retail chain’s latest financial report indicates that after-tax loss nearly doubled to Sh895 million as at December 31, 2017 from Sh547 million recorded during a similar period the previous year.

The firm that once had the largest retail branch network in East Africa has been struggling to implement a turnaround strategy aimed at cutting operational costs, winning back suppliers, and lifting earnings to woo prospective strategic investors.

The retailer’s turnover dropped 71.4 per cent for the six months under review to Sh526.9 million, down from Sh1.84 billion, which could be attributed to the closure of some of its branches and lack of stock.

Branch closures

Uchumi was, however, managed to reduce administrative expenses from Sh1.2 billion to Sh1 billion. The management attributed the positive development to the turnaround strategy meant to nurse the ailing retailer back to profitability. The retailer’s cost of sales also dropped significantly to sh380 million as at December 30, 2017, down from sh1.1 billion recorded over a similar period the previous year.

“The management continues to work with the board in the implementation of a restructuring strategy aimed at returning the organisation to a positive and stable earnings position,” said a statement signed by the board chairperson, Catherine Ngahu.

“This has already begun to positively impact the business, with a significant reduction in operating costs as we rationalise the branch network and seek to relocate and open stores which are more financially viable whilst appealing to our customer base.”

Despite the board’s positivity, the retailer has in the recent past faced several challenges, including a host of branch closures.