Challenges in Uchumi’s Uganda subsidiary has largely contributed to the company’s drop in its 2014 full year performance, recording a 6.8 percent decline in pre-tax profit to Sh453 million from Sh486 million in 2013.
The sales in Uganda declined by 12 percent which is attributed to competition, supply chain challenges and some locations becoming unsustainable due to infrastructural and lease mix challenges.
Uchumi last week closed its Freedom City Branch on Entebbe Road citing huge loses.
Uchumi CEO Jonathan Ciano says these difficulties may now lead to the company divestiture and relocation to “already identified more promising locations in the coming financial year.”
“Though there was a general decline in inflation in the East African economies, the rate was still high and this translated in to lower unit consumption,” Ciano says.
Kenya sales also saw a marginal growth of two percent which management attributes to freezing of public spending, effects of devolution as well as high cost of living which affected customer tendency to spend.
Tanzania sales on the other hand grew by 10 percent.
“We also had the effect of investment in new branches in Kenya and Tanzania, which are yet to mature,” Ciano remained optimistic, “During the 2013/14 financial year, 8 new branches opened including Mombasa Moi Avenue branch, Juja branch, Kisumu branch, Maua branch, Mbale in Eastern Uganda and Segerea, Makumbusho and Shekilango in Dar es Salaam.”
By the close of the financial year Uchumi’s total branch network stood at 37.
Uchumi’s finance costs jumped to Sh64 billion compared to Sh16 billion in full year 2013 occasioned by new loan facilities from Industrial and Commercial Development Corporation (ICDC) and Kenya Commercial Bank.