Best Institute for Core Java| Advanced Java| J2EE Training in India-Pune

Best Institute for Core Java| Advanced Java| J2EE Training in India-Pune

Uchumi mulls closing their branches over due

Uchumi Supermarkets could shut down some of its under performing branches resulting in job losses as it restructures its business.

Board chairman Khadija Mire said an audit to assess performance of all branches was already underway and would be complete in two weeks. Uchumi currently has 40 branches and 4,500 employees spread across the region.

"Our reporter has learned that Uchumi owes The Quality Group in excess of USD 700, 000/- as they are the tenants of Quality Center Mall and seems to have defaulted in rent and utility services.

Quality Group that at a stage was to become the rescuer of Uchumi, its brand and thousands of its employees may be left with no alternative but to take the legal route to recover its dues." 

"Is there a deliberate strategy from Uchumi management to crash its own share price and then introduce the HAND OF GOD which will come to their rescue or is it poor management? Whatever be the reason, there seems to be more than what meets the eye, and it is evident that Uchumi is in for far more troubled times ahead."

The reorganisation is expected to turn around the struggling retailer that has fallen behind on its payments to suppliers. Its stores are said to be performing poorly due to low staff morale and absence of basic goods from its shelves.

“We have not yet identified the outlets that will be affected in our new market strategy but the recommendation from the audit will be out in the next three weeks,” said Ms Mire.

The retailer last year closed one of its outlets in Uganda citing poor location that was negatively affecting its sales volumes.

Most Uchumi outlets have not been renovated for many years giving rival retailers an upper hand in attracting customers. These competitors are located in new malls and have spent heavily on branding and acquisitions.

“We are aware that Uchumi is more disadvantaged compared to other supermarkets given that most of our outlets have not being renovated in a long time. That is one of the areas we are concerned about because appearance is one of the preferences that most shoppers are keen on,” said Ms Mire.

On Friday the board appointed financial consultancy Deloitte to headhunt a new CEO.

“The chief executive officer will have overall strategic responsibility for Uchumi Supermarkets staff, programmes, expansion and execution of its mission,” said Uchumi in the Friday notice.

READ: Uchumi seeks CEO, meets suppliers over debt

“The new CEO will be required to have a Masters degree in business or an operations related field with at least 10 years experience at an executive management level within the retail supermarket industry or fast moving consumer goods sector,” added the statement.

IS UCHIMI DELIBERATELY PUTTING BUSINESS LOGIC & PRUDENCE ON BACK BURNER ?

WHY IS UCHUMI HELL BENT ON ERODING ITS BRAND EQUITY - IS IT BY DEFAULT OR DESIGN?

IS UCHIMI DELIBERATELY PUTTING BUSINESS LOGIC & PRUDENCE ON BACK BURNER?

UCHUMI’ S MANAGEMENT DECISIONS ERODING SHARE VALUE – WHO IS BENIFITING?

 

Uchumi has been in the news since last 6 months for all the wrong reasons, the once famous and reputed brand which enjoyed the goodwill of millions of customers till late April seems to be on a steep unstoppable downhill journey and is in serious financial trouble.

Bankers, lenders, vendors and suppliers are all queuing up to collect their dues, in the initial phases it seemed that the Retail Giant of East Africa with 37 outlets was facing some teething trouble with the change in management, but a few delays in payment to suppliers soon became a chronic illness and suddenly all was not well with Uchumi with defaults raising from a month or two going to 6 - 9 months.

The situation soon became alarming with suppliers refusing to offer further credit, Bankers refusing to lend, compounding the miseries of Uchumi leading to a huge cash crunch and no working capital, as the promoters, banks and financial institutions refused to bail them out.

It was evident that Uchumi needed an immediate capital injection, ironically it was earlier reported widely in the Kenyan media that one of their biggest creditors M/s Quality Group Limited, one of Tanzania’s most reputed and respected businesses houses decided to come to the  rescue of Uchumi and made an offer to them on 17^th of June 2015 offering a 20% premium on that days share value which stood at Kenyan 8.9 Shillings, As the Quality Group was not buying out stakes of a particular  share holder but was offering to infuse  additional equity into the Company,based on the enhanced equity it is learned that the Quality Group made a written offer of USD 22 Million, which was reportedly turned down by the Management of Uchumi.

Interestingly, the highest Share value at the beginning of the year was Kenyan Shillings 14 per Uchumi share which eroded to Kenyan Shillings 8.9 by Mid-June when Quality Group made the offer, since then the Uchumi Management has publically announced that they are selling prime company assets in Kenya to meet the debtors in Kenya & Uganda, they have also announced that they are closing down 7 branches in Uganda & Tanzania all this leading to further loss in the Share Value and shares have been trading between Kenyan Shilling 7.40 to 6.65 in July 15.

Financial analysts are working overtime but fail to understand why would Uchumi refuse an offer for capital injection when bankers and existing shareholders are refusing to fund the loss making unit, why would the management of Uchumi disregard a 20 % premium offer on their share whose value is eroding by the day, and why would the management come out in the open acknowledge Financial troubles, announce sales of Assets to meet liabilities, and announce closure of 20 % of its branches immediately which even a lay man would know would erode the Share value, Share Capital, Brand equity further leading to a crash.

Our reporter has learned that Uchumi owes The Quality Group in excess of USD 700, 000/- as they are the tenants of Quality Center Mall and seems to have defaulted in rent and utility services. 

Quality Group that at a stage was to become the rescuer of Uchumi, its brand and thousands of its employees may be left with no alternative but to take the legal route to recover its dues.

Is there a deliberate strategy from Uchumi management to crash its own share price and then introduce the HAND OF GOD which will come to their rescue or is it poor management? Whatever be the reason, there seems to be more than what meets the eye, and it is evident that Uchumi is in for far more troubled times ahead.