Uchumi Supermarkets has closed operations in Uganda and Tanzania to stem further losses.

Uchumi Chief Executive Officer (CEO) Dr Julius Kipng’etich, said while the outlets make up 4.75 per cent of the retail chains operations, they account for 25 per cent of operating costs.
“The two subsidiaries have not made any profits over the last five years which means they have been draining parent operations,” said Dr Kipng’etich.

In a statement issued to the press yesterday, the CEO said the closure was aimed at stopping further financial bleeding, adding that the board has decided to close down the regional units to speed up the stabilization of its Kenyan opeations.
Uchumi had initially closed two of its branches in Uganda- Kabalagala and Nateete in Kampla last week, before yesterdays’ announcement.
“All stores in both markets are now closed and will be liquidated,” said Dr Kipng’etich. He said the decision by the listed firm has been communicated to the Capital Markets Authority, the Nairobi Securities Exchange and other key stakeholders.
The CEO said the retailer will seek shareholders’ approval for implementation and will consider re-entering the markets at an appropriate time in the future, once the parent business has stabilized.
“Uchumi will however continue trading in the regional bourses, the management said. “We are confident that we can now concentrate on turning around Uchumi by focusing on the 95 per cent of the business that makes money for shareholders,” he said.
The supermarket has also closed its Syokimau and Maua branches in Kenya and more are expected to be closed, as it seeks to consolidate its operations. Last year, Uchumi’s six outlets in Uganda posted a pre-tax loss of 341.6 million compared to Sh256.4 million a year earlier and Sh75.9 million in 2012.
In Tanzania, where Uchumi has four outlets, the retailer made a pre-tax loss of Sh125.2 million last year. The chain reported a half-year loss of Sh262.3 million compared to a net profit of Sh106.9 million recorded a year earlier.  The poor performance was attributed to slow sales and higher operating costs.
Uchumi sent its former CEO Mr Jonathan Ciano packing in June for what the board termed “gross misconduct and negligence” and replaced him with Dr Kipng’etich who was Equity Bank’s chief operating officer. He was previously the managing director at Kenya Wildlife Service. Uchumi’s exit leaves Nakumatt and Tusky’s as supermarket chains with a regional presence.