Nakumatt engages suppliers to stock emptying shelves

Nakumatt engages suppliers to stock emptying shelves

Regional retailer Nakumatt’s woes look to be far from over even it closes in on a strategic partner to inject capital into the business.

The cash crunch has seen Nakumatt go up against it with its retailers over unsettled payments that has lately resulted in some goods missing from its shelves.

This has seen Nakumatt open talks with suppliers to normalize delivers as it undergoes what it terms as a ‘challenging period’.

Newly appointed Chief Marketing Officer Andrew Dixon acknowledged the partial stock out of some goods, intimating that the retailer was working to resolve the issue.

“We are undergoing a challenging period in our business operations which has necessitated a number of rapid interventions,” he said.

“I would like to reassure you that we are on course to regularize our operations and stocks in coming days,” Mr Dixon went on to say.

This is the second time since October that Nakumatt has openly stated its facing difficulties.

In October, Nakumatt Managing Director Atul Shah stated the challenge stems from hitches in the supply chain system that has meant the retailer has not been working with the optimal amount of goods to service its operations.

Nakumatt’s debts hit Sh15 billion as of 2015, indicating the financial stress.

This has seen the firm delay payments to suppliers who now appear to have resulted to not providing goods until their debts are settled.

Nakumatt has been engaging suppliers to reschedule payments and work out new supply contracts as it awaits injection of much needed capital.

“I would like to pass my regret at any inconvenience that our situation might have caused to any of our customers,” Mr Dixon said.

Two weeks ago Nakumatt indicated it was finalizing a deal with an unnamed investor to pump in $75 million (approximately Sh7.7 billion) in exchange for a 25 percent stake.

Despite the financial strain, Nakumatt recently opened its 65th branch.

Retail analysts say there has been no drastic shift in consumer patterns but add that retailers would need to operate with more financial headroom to cushion short term challenges.

“Expansion does take time before the stores break even and become profitable. You probably need ten to 15 stores in a particular country for it to make economic sense. There is nothing fundamentally wrong with the pattern we are seeing, it’s just that you must chose the right strategy in light with how the industry is going and also raise the right funding,” Genghis Capital Chief Executive Officer Geoffrey Gangla said in an interview.

Additional reporting by Mumbi Warui

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