Although it had hoped for a financial bailout to inject fresh blood in its businesses across the East African region, the deep financial distress has forced cash-strapped Nakumatt to again offload some of its prime-located stores, which it opened hoping to tap into the wallets of the affluent Ugandans to improve profitability.
A statement issued by property managers Knight Frank Uganda, indicates that three Nakumatt stores including Acacia Mall, Kololo, Village Mall, Bugolobi and Victoria Mall, Entebbe have been closed to pave way to redevelop the said malls.
Nakumatt Uganda, together with its parent company Nakumatt Holdings Kenya have been facing financial challenges since last year, forcing them to close several branches both in Uganda and Kenya.
In April, it closed the Katwe branch because it owed sh297m in rent arrears.
Kenya media report that as of April this year, the retail store had accumulated a huge debt, estimated at sh609.1b (Ksh18b), up from sh159b (Ksh4.7b) in 2012.
In October last year, Ugandan suppliers halted giving the retail store merchandise because of failure to meet its financial obligation. This saw a number of Nakumatt’s stores including Garden City, Bukoto, Naalya and Bugolobi run out of stock on some items.
In February this year, Nakumatt announced that it was getting a sh266.1b ($75m) capital injection that would enable it clear supplier debts and revamp outlets.
The money was in form of an equity acquisition of 25% from an undisclosed buyer. However, the funds are yet to come, further pilling pressure on the distressed company that is unable to meet some of its financial obligations.
At the peak of its challenges last year, the retail chain also announced that it had embarked on a re-organisational strategy, including renegotiating contractual agreements with suppliers, to enable it to safely wade through the turmoil.
They were reported to have engaged suppliers to review their supply terms, in addition to undertaking a management enhancement programme that involved recruiting and retaining management personnel to handle specialised units
The company is also said to have integrated an advanced warehouse management system to allow the business hold optimum stocks based on daily demands of individual branches to cut on losses. These are yet to have an impact.
Suppliers take it to court
Last week, Nakumatt management was summoned by the Commercial Division of the High Court to respond to two different law suits in which Britania Allied Industries (L) and Charms Uganda Limited, accuse it of failing to pay over sh400m for supplies.
Britania indicated that during the period from January 2016 to June 2017, Nakumatt ordered for consignments of goods at a reasonable agreed upon price but is yet to pay.
The Minister for Animal Industry Bright Rwamirama, Mpororo Group Ltd, and Ms Florence Rwamirama dragged Nakumatt to court over rental arrears from 2013 totaling sh2b.
The Mbarara outlet was forced to close.
The South African ratings agency, Global Credit Ratings, also downgraded the retail chain’s credit risk profile to ‘watch list’, indicating a weakened ability to meet outstanding financial obligations.
Started its operation in Uganda 2009, Nakumatt had nine branches in Uganda mainly in the central region; two in Bugolobi, Oasis Mall, and Acacia Mall in Kololo and Naalya. Others were in Bukoto, Katwe and Mbarara.