Troubled Giant: Uchumi To Close Some Branches And Lay Off Staff

UCHUMI Supermarkets will close some branches and sack employees who double as suppliers in new measures targeted at profitability.

Acting chief finance officer Sam Oduor said the company “will shrink in order to grow” if necessary, adding that the recent rapid  expansion was devoid of market research.

“Board has decided to make a pit stop with regards to expansion. We will look at country and branch contributions and rationalise these on a case by case basis,” said Oduor at an investor briefing yesterday.

He said the firm’s expansion strategy was not “explicitly documented” and investment appraisals on the new outlets was unclear.

“To be honest we made an attempt to expand faster than our capabilities. We opened branches in places that were not making a positive contribution to our bottom line,” said the acting CFO who joined the company a week ago.

Uchumi with 50 branches regionally announced that it has borrowed Sh500 million from Kenya Commercial Bank to clear overdue debts to suppliers.

The company which retains more than 3,000 suppliers said it is clearing arrears which stood at Sh800 million as at end last month.

Uchumi has contracted KPMG to conduct a forensic audit into the operations of the company, mainly its supply chain which is expected to be complete in six to eight weeks.

Oduor said no member of Uchumi board or staff will be allowed to act as a supplier.

Preliminary investigations, Oduor said, showed a number of employees were supplying goods to the retailer while some supplies were more expensive because of the use of middlemen.

“We know it was there but we cannot say how many employees were in the supply business. Most of what we know so far is something we have been told by whistleblowers within and outside the organisation,” he said.

Director James Murigu said the company will negotiate better prices for its stock by dealing directly with manufacturers since currently most supply contracts are brokered by middlemen, pushing up costs.

Last month, Uchumi board sacked CEO Jonathan Ciano, chief finance officer Chadwick Okumu and suspended human resources manager Michael Kibe, accusing them of gross misconduct and negligence.

Consultancy firm Deloitte has been contracted to handle the recruitment for the three positions with the managers expected to be in office by October 1.

– See more at: The Star