Uchumi Supermarkets saw its subsidiaries in Uganda and Tanzania sink deeper into losses in the year ended June, signalling difficulties in the firm’s quest to expand its share of the competitive regional retail market.
The Nairobi Securities Exchange-listed retailer says in its latest annual report that the Uganda unit recorded its third consecutive loss in the period while the Tanzanian operations continued its loss-making streak since Uchumi set up shop in Dar es Salaam in 2011.
The losses by the subsidiaries weighed down Uchumi’s net profit which rose 7.6 per cent to Sh384 million compared to Sh357 million the year before.
Uchumi chief executive Jonathan Ciano said: “Total group sales registered a marginal growth due to a drop in Uganda mainly attributed to competition, supply chain challenges and some locations becoming untenable due to infrastructural and tenancy mix challenges.”
He added that new branches in Kenya and Tanzania “are yet to mature” to begin contributing to the bottom-line.
Uchumi’s outlets in Uganda posted a pre-tax loss of Sh341.6 million in the period, compared to Sh256.4 million a year earlier and Sh75.9 million in 2012.
The poor performance in Uganda forced Uchumi in September to shut down one of its six outlets in Kampala located at Freedom City mall outlet. The closed branch had been opened in June 2012.
The retailer last made a pre-tax profit of Sh32.7 million in Uganda in 2011. In Tanzania, where Uchumi has four outlets, the retailer made a pre-tax loss of Sh125.2 million.
Uchumi says in its latest annual report that the Uganda unit recorded its third consecutive loss in the period while the Tanzanian operations continued its loss-making streak since Uchumi set up shop in Dar es Salaam in 2011.
The performance means that Uchumi is relying on its Kenyan operations to turn a profit, clouding its short-term profit outlook even as it plans to deepen its regional expansion with an entry into Rwanda by December.Lisit praestin vulpute