Nairobi — Uchumi Supermarket Chief Executive Dr. Julius Kipngetich has resigned after two years attempting to turn around the struggling retailer.
Kipngetich who was poached from Equity Bank was appointed on August 26, 2015 and has helped Uchumi improve margins in a challenging retail environment.
He has also secured a strategic investor in a deal expected to bring back the retailer back on its feet.
Chief Financial Officer Mohammed Ahmed Mohamed has been named as the acting CEO as the Board seeks for a suitable CEO.
"The board remains committed to execute a turnaround strategy aimed at ensuring the company's return to profitability. The board further takes this opportunity to thank Dr. Kipngetich for his dedicated service to the company during his tenure and wish him all the best in his future endeavors," said Uchumi Board Chair Catherine Ngahu in a statement.
Kipng'etich had assured shareholders and members of the public that the listed retail chain will be stable in the next 100 days when he took over.
READ: Uchumi Supermarket secures investor to pump in Sh3.5Bn
Two years since he took over, the firm is still struggling and is yet to break even.
During his term, the firm also closed its operations in Uganda and Tanzania as well as five outlets in Kenya.
Kipngetich was implementing a franchise-model of business that would have seen the firm outsource some services to a franchise that includes outlets, stock, distribution centres and logistics among others.
"We will share the stock (I supply to them, they stock, I give them a fair price), we share the distribution centres like warehouses but we deliver to the customer as the lowest value possible and we become truly the Uchumi that was originally meant for Kenya in 1976," he had explained.
Kipng'etich had stated that it has not been an easy road, at least not what he expected when he took over.
"Uchumi has come a long way since I have been here. It has been a tough journey. When I arrived we had to figure out the state of the company, we realized that the books were not sitting well, many suppliers had stopped supplying. We drafted a rescue plan that needed urgency but unfortunately, things never moved as fast. That include land sales, which has slowed down the turnaround of the company," he stated.
Discussions are still ongoing with the strategic investor who will inject Sh3.5 billion into the retailer which will partly plug the Sh5 billion debt hole the supermarket owes suppliers and financiers.
The government is expected to release Sh1.2 billion to the retailer as part of a bailout loan.
"We have so far received Sh500 million from the government and with the injection from the investor, we are now ready to restock our stores in the next 90 days. Our franchise model of business will also begin in those 90 days," Kipngetich said in an earlier interview with Capital FM Business.
Uchumi Supermarket cut their losses by 40 percent in the 2017 financial year to Sh1.7 billion compared to Sh2.8 billion loss in 2016 attributed to improved cost management.
Expenses went down by 42 percent in the period under review from Sh3.6Bn in 2016 to Sh2.1Bn in 2017 while the cost of sales hit Sh2.5bn from Sh6.4bn in 2016.
The firm says that despite the suppressed business in the current and past financial year the firm recorded improved margins.
"The board and management continued to implement initiatives aimed at recovery and turnaround in performance including streamlining operations, strengthening management, and implementing improved operational processes," said the Board.