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Nakumatt embarks on Shs51.1billion cost cutting drive

Two outlets to be closed in Kampala in the new plan

Regional retail chain, Nakumatt Holdings, is targeting Ksh1.5billion (Shs51.1bn) in cost cuts annually with the closure of several branches across East Africa starting this month.

The chain has already closed Katwe outlet in Kampala over accumulated rent arrears estimated to be Shs297million.

Bernard Mutua, the Nakumatt manager in Uganda told The Independent on May 10 that the decision is aimed at saving the retail chain of billions of shillings in operational costs – rent, salaries and other expenses – ahead of planned new capital injection.

“This is a decision that cuts across the region and we are at the moment working on the restructuring process and determining which outlets to be closed,” he said, “In Uganda, we are looking at closing may be one more outlet based on performance and this will be communicated once all the necessary processes have been concluded.”

Mutua could not say how many jobs are to be shed and the branches to be affected.

Till last month, Nakumatt has been operating nine outlets in the country concentrated mainly in the central region and employing 600 workers.  Overall, it operates more than 60 outlets in Kenya, Uganda, Rwanda and Tanzania.

But sources familiar with the Nakumatt operations told The Independent that one or two branches are likely to be closed in Uganda and that they could include Bukoto and Naalya in Kampala suburbs.

The sources said it had become difficult for customers to branch off to the Bukoto outlet since the rehabilitation of Old Kira road last year, a similar challenge facing the Naalya outlet. This, the sources say, has negatively impacted on the retail chain’s sales.

“Nakumatt Oasis Mall has always remained the best performer among all the outlets followed up closely with the two branches in Bugolobi,” the sources said.

A spot check by The Independent on May 10 shows that many of Nakumatt outlets still lack most of the basic commodities including beverages with most of the shelves and fridge’s remaining empty for nearly ten months now.

Few or no customers could be spotted shopping in a number of outlets including Bukoto, Acacia Mall and Oasis Mall on Yusuf Lule Road, contrary to their rival outlets such as Capital Shoppers and Checkers Supermarket Located a stone-throw away.

In Kenya, Atul Shah, the Nakumatt managing director, said the branch culling strategy will start with sub-optimally performing branches whose lease contracts are due for renewal to be followed by branches in poor locations.

The new developments come as the retail chain is also making changes in its management structure as part of the conditions demanded by a new investor, who is said to be in the final stages to inject in US$75 million (Shs 269.5bn) in exchange for 25% shares.

Last month, Nakumatt’s long-serving regional operations and strategy director Thiagarajan Ramamurthy exited the company and was replaced by a former executive at the UK- based Tesco, Andrew Dixon.

Dixon is now the chain’s chief marketing officer and will be helped by regional chief officers. Others who have been appointed into the retail chain’s operations are Srihari Vemula as the chief operations manager from the Omani-based Khimji Ramdas Group and Manoj Singh as the new group financial controller.

In Uganda, Sameer Shah together with Mutua were retained as joint country managers while Daniel Kimweli and Srinivasan Suresh were retained to continue serving as the joint country managers in Tanzania. Adan Ramata was retained as the country manager for the Rwandan market.

The retail chain has also hired UK’s Outram Cullinan & Company Strategy Consultant to develop a ten-year growth plan.

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