To cut costs, Nakumatt will close more poorly performing branches in Uganda and Kenya


Nakumatt Holdings, the Kenyan retailer, has said it plans to close more branches in Kenya and Uganda in a restructuring exercise it says will save it Shs52.8bn (KShs1.5bn) annually.

The plans were revealed by the retailers’ managing director, Atul Shah, on Monday. Nakumatt also announced that it is closing a struggling branch at KU Plaza in Nairobi, the third store it is closing in four months.

In February, Nakumatt closed a store in Nairobi’s central business district and blamed low sales for the decision. Last month, the Nakumatt store at Muganzirwazza mall in Katwe, Kampala, was closed over rent arrears, with an official saying they had accumulated due to “a depressed trading environment and poor sales” at the specific branch.”

Last year, Nakumatt admitted it was facing cash flow problems and was in talks with financiers for a capital injection. Early this year it said it was selling a 25% stake to a foreign fund for $75 million, and later announced management changes to help it navigate “the ongoing organisational restructuring demands.”

Read More: Nakumatt says it is facing cash flow problems, seeks financiers

Now, Nakumatt says it is going to close other poorly performing branches. “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,” Mr Shah said.

The closure of the Katwe branch brought down Nakumatt’s stores in Uganda to eight.

The retailer will also cut its stocks to “retain a lean variety of profitable retail products,” Mr Shah said.

In Kenya, reports Daily Nation, it has reduced the number of juice brands it sells to eight from 26, and water brands to three from 12.

The retailer also announced a hiring free. Additionally, it is closing two warehouses in Kenya as part of its cost-cutting drive.

Nakumatt operates stores in Kenya, Uganda, Tanzania, and Rwanda.

Related:
Nakumatt to sell 25% stake for $75 million to reduce debt burden