Kenyan-owned Nakumatt Supermarkets has announced plans to close its poorly performing branches in Kenya and Uganda as part of cost-cutting measures aimed at saving the retailer Sh52.5 billion annually.
One of Nakumatt Supermarket’s nine branches in Katwe, Uganda, last month closed following rent arrears running into millions of shillings, highlighting the depth of the retailer’s financial woes.
And according to Kenyan publication, Business Daily, the first of many stores to be shut down is the Haile Selassie Branch located at the Kenyatta University Plaza, Nairobi which is set to be closed this month and handed back to the university, which is the landlord.
The chain did not, however, disclose the total number of branches that will cease operations under the move.
Mr Atul Shah, Nakumatt managing director, says the business has also frozen recruitment of new staff.
“The branch culling strategy will start off with sub-optimally performing branches for whose leases contracts are due for renewal to be followed by branches in poor locations,” he said in a statement.
Nakumatt has also announced that it has started reducing its store keeping unit (SKU) exposure by delisting slow-moving products.
“We have embarked on a shelf stocks optimisation programme to enable us retain a lean variety of profitable retail products,” said Mr Shah.
Nakumatt is banking on cash injection from a new strategic investor to address frequent stock outs at its outlets.
The retailer is battling to cut back on huge debt owed to suppliers estimated at Shs525 billion in February 2015 from Shs147 billion in 2011, a situation that has been piling pressure on its operations.
