Uchumi supermarkets full-year earnings to fall

Uchumi Supermarkets’ earnings for the year ending in June will fall at least 25 percent compared with the previous year due to “challenges on the working capital”, it said on Monday.

The company fired Chief Executive Jonathan Ciano and Chief Financial Officer Chadwick Omondi Okumu in June after the chain fell behind on supplier payments. It ordered a forensic audit to see how cash from a rights issue was spent.

“The challenges that led to an adverse performance for the year 2015 were mainly attributed to challenges on the working capital,” the company said in a statement on Monday, without giving further details.

It said recent changes, including to its top management, would lay a “solid and sustainable foundation” for growth.

The company, which has outlets in Kenya, Uganda and Tanzania, said in June it had terminated Ciano and Okumu’s contracts due to “gross misconduct and gross negligence” and that it would bring in an external consultant to review its business model and expansion strategy.

Last month, it said it would close unprofitable branches after a rapid expansion in recent years. It opened several branches under Ciano, who helped revive Uchumi in 2006 when it was put into receivership and given a government-led bailout.

Uchumi is facing competition in Kenya from domestic supermarkets such as Nakumatt as well as France’s Carrefour, which is due to open stores this year.