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Tanzania, Uganda subsidiaries add 14.5 pc to Uchumi’s sales

Tuesday November 19 2013
uchumi-1911

Uchumi supermarkets along Agha Khan walk Nairobi. The contribution to sales of Uchumi Supermarkets Tanzania and Uganda subsidiaries has risen to 14.5 per cent over the past four years reducing the retailer’s reliance on Kenya. Photo/Ann kamoni

The contribution to sales of Uchumi Supermarkets Tanzania and Uganda subsidiaries has risen to 14.5 per cent in the past four years reducing the retailer’s reliance on Kenya, which is still its largest market.

An analysis of latest data from the retail supermarkets chain shows that during the period ended June 2013, Kenya contributed 85.5 per cent of the firm’s sales with the rest coming from its Tanzania and Uganda subsidiaries.

Data contained in Uchumi Supermarkets information memorandum that was approved before its cross listing on the Kampala bourse last week, shows that Tanzania and Uganda contributed Ksh2.07 billion ($24.1 million) of sales.

Kenya on the other hand contributed Ksh12.1 billion ($141.8 million) of the total sales that amounted to Ksh14.3 billion ($165.9 million) for the full year ended June 2013.

READ: Uchumi Supermarkets posts 30pc growth in profit, plans expansion

In the previous year, Kenya contributed Ksh11.8 billion ($140.6 million) or 85.9 per cent of total sales that amounted to Ksh13.8 billion ($163.8 million) while Tanzania and Uganda contributed Ksh1.9 billion ($23.1 million) or 14.1 per cent.

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Four years ago Kenya contributed Ksh7.3 billion ($135.5 million) or 89.3 per cent of total sales amounting to Ksh8.2 billion ($106.3 million) while Uganda, its only subsidiary at that time, contributed Ksh880 million ($11.4 million) or 10.7 per cent for the period ended June 2009.

The reliance on sales from Kenya is being reduced as the retail supermarkets chain expands into the region, increasing its customer numbers but the subsidiaries are yet to start making a significant contribution to profits.

The Tanzania and Uganda subsidiaries made a combined loss before tax of Ksh387.6 million ($4.5 million) for the period ended June 2013 compared to a combined loss before tax of Ksh218.5 million ($2.5 million) for the period ended June 2012, attributed to initial set up costs.

The retail supermarkets chain opened outlets in Ongata Rongai in Nairobi in August last year, the Sugarland Plaza in Eldoret and a store in Natete in Kampala in December.

READ: Uchumi plans several branches in Rwanda

This brought its total supermarkets network in the region to 28 for the period ended June this year of which 22 are in Kenya, one is in Tanzania and five in Uganda.

“Two more supermarkets are under development in Mbale and Mbarara. In order to drive business in Uganda, Uchumi has vigorously engaged in turnover growth through customer numbers, geographical growth as well as cost management strategies,” notes the information memorandum.

Last week, the retail supermarkets chain, whose shares primarily trade on the Nairobi Securities Exchange (NSE) and which is waiting for approvals from regulators to cross list on the Dar es Salaam Stock Exchange (DSE), cross listed its shares on the Uganda Securities Exchange (USE), giving it more visibility in that market.

READ: Uchumi shares start trading on Kampala bourse

This was a month after it cross listed its shares on the Rwanda Stock Exchange (RSE), another market that it is planning to venture into in the coming months.

“The Dar es Salaam project is advancing well and we hope to close all regulatory issues to the satisfaction of the respective authorities of the country and conduct a similar ceremony there in the very near future,” said Jonathan Ciano Uchumi’s chief executive officer at the USE listing ceremony.

READ:Uchumi Supermarkets becomes third to cross-list on Kigali bourse

Formal retail in Uganda is in its initial stage of development and covers approximately 15 per cent to 20 per cent of the entire retail industry, with the retail business mainly concentrated in Kampala City according to Uchumi’s information memorandum.

Its main competitors include Nakumatt which has four stores in Uganda and which is planning to open another and Tuskys Supermarkets which entered the Uganda retail sector by buying two Payless outlets in 2011 but which has now grown its stores network to four.

Uchumi's information memorandum also lists Capital Shoppers Ltd, a local supermarket operator which has a large local client base mainly in the wholesale business, Shoprite which has three stores and Quality Supermarket, a locally owned Supermarket also with three stores.

Others include Standard Supermarket which has one store and Game which is rebranding its only store to Massmart after it was taken over.

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