Uchumi cuts half-year loss to Sh547.3m

Uchumi Supermarkets restructuring plans continue to pay off, with the retailer cutting its half-year loss by nearly half a billion shillings.

In the six-month period between July and December Uchumi’s loss stood at Sh547.3 billion down from Sh1 billion a year earlier.

The results were driven by ongoing cost cutting reforms as the retailer moves to reverse its losses.

Uchumi also benefited from sale of non-core assets, which boosted income.

The country’s oldest retailer however continues to struggle with bumping up its revenues, with Uchumi management adopting a more cautious stock policy.

During the first half, Uchumi’s sales dropped from Sh4.3 billion to Sh1.4 billion.

Uchumi Chief Executive Officer Julius Kipng’etich said in a statement to shareholders that the firm is currently reviewing its supply contracts to ensure the retailer does not tie up too much of its capital.

“The sales were significantly impacted by lack of optimal stock levels due to delays in funding,” Dr Kipng’etich said.

Uchumi is seeking Sh1.8 billion from the government as part of plans to raise funds to stabilize operations.

In the supplementary budget, the National Treasury allocated the retailer Sh600 million but it was not immediately clear whether the funds had been transferred.

Besides the government bailout, Uchumi is also actively seeking a strategic investor to pump in funds.

As at the end of December, Uchumi made Sh342.4 million in profit from the disposal of assets.

“The board and management continue to pursue strategies aimed at stabilizing the company’s performance including sale of non core assets, sourcing for a strategic investor, building supplier confidence and enriching customer experience at our stores,” Dr Kipng’etich said.

Uchumi has put in place plans to venture into franchising by partnering with neighborhood retailers to boost sales.

The model dubbed Uchumi Express will see 300 stores opened over the next three years in strategic locations.

The Uchumi CEO said the anticipated injection of capital would lift the company’s performance in the second half.

“The current cost management efforts and expected growth have provided optimism of growth trajectory for the business to break even in the next financial year and return to profitability,” he said.

The board did not recommend the payment of an interim dividend.

Tags:

National Treasury uchumi Trade bailout retail strategic investor suppliers restructuring plan capital raising plan cautious stock policy cost management Julis Kipng'etich return to profitability sale of non core assets Uchumi Express

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