Nakumatt shuts down another store over huge rent arrears
East Africa’s largest retail chain Nakumatt has shut down another store over outstanding rent arrears.
The struggling retail giant closed doors of one of its outlets, Katwe branch in Uganda, which was opened in October 2013.
According to Ugandan media, the retailer has not paid rent for several months and owes the outlet’s landlord approximately Sh8.5 million, forcing it to close the outlet’s doors in a bid to recover the money.
HIGHLY INDEBTED
The retail giant is said to be highly indebted with many of their outlets across East Africa lacking essential items.
In February, the retail store closed its Ronald Ngala branch in Nairobi citing low sales from the downtown shop that haD been operational for years.
At the time, Nakumatt managing director Atul Shah said the outlet had been struggling over the years with poor sales volumes and had become unsustainable to maintain owing to high cost of operations.
Mr Shah said the affected employees were absorbed in other branches.
According to South African rating agency GCR, the retail chain’s gross debt more than tripled in as many years to Sh15 billion in the period to February 2015 from Sh4.2 billion in 2011.
Nakumatt started showing signs of struggle late 2016 which included irregular payment schedules that forced some suppliers to start demanding cash on delivery, while others went a notch higher to stop supplying Nakumatt.
Nakumatt also has a presence in Tanzania and Rwanda, and has several branches in and around Uganda’s capital.
DEBT HAS TRIPLED
Nakumatt’s gross debt has more than tripled to Sh15 billion in February 2015 from Sh4.2 billion in 2011, piling pressure on operations and resulting in long payment delays to suppliers.
The retailer is currently working on a Sh7.5 billion deal to sell a 25 per cent stake to a strategic investor to try and retire its heavy debt burden in a transaction that values the business at about Sh30 billion.
The company’s long serving director Thiagarajan Ramamurthy exited the retailer, just months before a major shakeup expected in a few months from now.
