Uchumi eyes entry into South Sudan retail market
A branch of Uchumi in Nairobi. The firm is eyeing the S. Sudan market. File
By GEOFFREY IRUNGU (email the author)
Posted Thursday, September 15 2011 at 00:00
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Uchumi Supermarkets is eyeing entry into the South Sudan market as part of the listed retailer’s expansion drive to boost growth.
Chief executive Jonathan Ciano said Tuesday Uchumi would open a branch in Juba, which is likely to remain the newly independent State’s commercial capital “for at least a decade” even as plans are under way to relocate the administrative town to Ramciel.
“The change in capital will not affect our plans. If anything it may take ten years for the other city to catch up with Juba. You need to draw a parallel with Lagos and Abuja or between Dar and Dodoma. Commercial activities are still concentrated on the older cities even though the capitals have moved,” said Mr Ciano.
Uchumi is currently looking for business premises and does not have a firm date when it expects to have opened for business in South Sudan.
The retailer also plans to expand to other locations or add to existing branches in towns where it already has a presence. Areas targeted for opening new branches include Kisumu, Ongata Rongai, Kisii, Taj Mall (Embakasi), Gulu, Kabalagala, Quality Mall in Dar, Natete and Freedom City in Kampala.
The supermarket chain is facing increased competition in the saturated Kenyan market from retailers such as Naivas, Tuskys and Nakumatt; that expanded at a time that the firm was under statutory management.
Uchumi Supermarkets, which re-listed at the Nairobi Stock Exchange (NSE) in May after a five-year absence, has returned to profitability. In the year ending June 2011, the company announced a pre-tax profit of Sh514.8 million compared to Sh433.2 million earned in 2010.
However, its after-tax profit was lower at Sh390.4 million from Sh865.1 million in the previous year, when it received tax credits due to a history of loss-making.
The company share was trading at Sh8.30 yesterday afternoon down from the previous day’s average of Sh8.40. This would suggest a P/E of 5.6 compared to the commercial and services sector average PE of 8.4 as at September 9.
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