Uchumi Supermarkets, a once-leading Kenyan Retailer, was the top gaining stock at the Nairobi Securities Exchange (NSE) after edging upwards by 12.0%.
The troubled retail chain, which has been drowning in debt following a mismanagement of its funds in earlier years, is in the process of formulating a recovery.
Following an audit of its books in 2006, the company was closed down temporarily and placed in receivership. It was also de-listed from the NSE. At the time, its closure was described as one of the greatest corporate disasters in independent Kenya history.
After the scandal, a government-led rescue plan was initiated and five Uchumi outlets in Kenya’s capital city of Nairobi, were reopened on July 15th, 2006. The State has since injected more than Ksh3 billion ($30 million) into the chain in a bid to save the franchise.
By January 2011, the retail chain had returned to profitability and was re-listed on the NSE.
However, Uchumi has seen many of its outlets suffer low supplies as many chains are understocked with several isles sporting empty shelves.
The retailer recently announced that it expects to complete the sale of a plot of land it owns in Kenya’s Kasarani area in one week. According to Market Analysts from Kenya-based financial services group, Amana Capital Limited, the retailer will use the proceeds to settle supplier debts and negotiate a resumption of supplies.
Its performance at the NSE has been lukewarm in recent weeks.
“The share price closed at Ksh1.40 from the previous week’s close of Ksh1.25. Year-to-date, the stock price has declined by 69.57%,” said Amana Capital Investment Analyst, Kevin Njugi Mwangi, in a statement issued on July 23rd, 2018.
Uchumi is the oldest supermarket chain in Kenya, having been in operation for over 38 years. Earlier this July, four strategic investors expressed interest in injecting more than Ksh5 billion ($50 million) required to save the retailer. Uchumi CEO, Mohammed Mohammed said the four are undertaking due diligence and a final decision will be made in six months.