Uchumi To Quit Uganda Market, Sales Down 12%

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.

Uchumi

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.

4 thoughts on “Uchumi To Quit Uganda Market, Sales Down 12%

  1. When they go can we have only Ugandan supermarkets in the market. We do not benefit from these big chains that take back the profits, We need Ugandan ones employing only Ugandans.

    1. I happen to agree with you but, how far is your government willing to offer support to local investors who are Ugandans at heart? If not politicised, it would be rather a good move.

      1. Government is not interested in local actors because empowering local actors means locals are not entirely dependent on government and harder to lead. They prefer foreigners who they can control. Explains why sembule can not be supported by the same government that gives Sudhir tax holidays in billions. As these supermarkets grow, the smaller ones that are locally owned close. You can see that in Mbarara with Nakumatt and in Ntinda with what Tusky’s has done to the smaller supermarkets that are locally owned.

  2. I worked with Kenyan companies for sometime and i also traveled to Kenya so many times. At least i know what am talking about and i know how these companies treated me and the rest of the Ugandans even when we were not staying in Kenya.

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