Kenya: Tuskys Woes Pile Up As Chief Finance Officer, Managers Rush for the Exits

Troubled Tuskys Supermarket is now battling a mass exit of senior managers and security officers amid a growing spate of branch closures, suspension of stock deliveries by suppliers, workers' unrest, and incessant disconnection of electricity supply by Kenya Power over unpaid bills.

This comes amid a deepening financial crisis precipitated by declining sales and the failure by the undisclosed Mauritian fund to release the Ksh2 billion ($20 million) in fresh capital as per the agreement signed last month (August).

The EastAfrican has learnt that the retailer that is operated by Tusker Mattress Ltd (TML) has lost about six senior managers including the chief finance officer, supply chain managers, branch managers and security officers in Nairobi and Meru in the past two weeks.

Last week its chief executive Daniel Githua confirmed the exit of supply chain manager Emmanuel Njeru.

"As you are aware Emmanuel Njeru who has been handling general merchandise suppliers left the company. In his absence we have Edwin Ochieng handling this," Mr Githua said through an internal memo dated September 16.

However, Githua could not confirm the exit of the other managers as our calls and text messages to his cellphone went unanswered.

Tuskys chairman Bernard Kahianyu said in a statement last month that the retailer had signed an over Ksh2 billion ($20 million) financing agreement with a Mauritian fund subject to fulfilling transaction condition precedents.

As a result, the undisclosed "deadlock" has held back the release of funding thereby worsening the retailer's precarious financial position.

Last week Tuskys in communications to Omega Risk Management Ltd, a loss control and risk management firm, claimed to have unlocked the deadlock that had prevented the release of funds from the undisclosed Mauritian fund.

"Tusker Mattresses Ltd (TML) communicated yesterday (September 14) to us that they have unlocked the deadlock that had prevented the investor release the fund injection. In addition they stated that they were drawing up schedules of payments to be released to the various suppliers and service providers within the course of this week (last week)," Omega told its staff contracted to various branches of Tuskys through an internal memo dated September 15, 2020.

Omega, like Syndicate Agencies Ltd, was contracted by Tuskys to carry out tasks such as man staffing entrances, overseeing receiving bays, providing floorwalkers, and manning CCTV stations to monitor customers and staff to reduce inventory loss.

Protests

According to the memo seen by The EastAfrican most of the Omega staff have not been paid their May, June, July and August salaries.

"This has had a paralysing effect on both our mental and physical wellness," according to the memo.

Last week on Monday (September 14) 10 of non-unionised workers contracted to Tuskys Supermarket protested their "inhumane" dismissal and the failure by the ailing retailer to make a firm commitment over the payment of their severance package.

The workers belonging to three outsourcing firms (Artemis, Amicum, and Qrisha) stormed the offices of the firms located on Kimathi House in Nairobi's Central Business District demanding their two months' salaries ( July and August) and a one month (September) pay in lieu of termination notice.

On Thursday, September 10, staff contracted under the outsourcing firms starting receiving their termination letters, some with promises to settle their salary arrears at the end of September 30.

And on Wednesday (September 16) Artemis Outsourcing Ltd was trying to manage and dispel a workers' unrest planned for Thursday (September 17).

"We appreciate your patience for the duration that you have not been paid. We understand the frustration that you are undergoing during these trying moments. As you are aware our client (Tuskys) has entered into agreement with a strategic partner for recapitalisation and the process is at the final stages of completion," Lawrence Mosoi, Artemis' Human Resources Manager told its workers contracted to Tuskys through an internal memo dated September 16, 2020.

"We are aware of isolated cases of incitement calling employees to participate in unwarranted and illegal activities that may jeopardise the activities of our client. We therefore request all our employees to distance themselves from such unlawful activities as they may have negative consequences to the client, the employees and the business at large. We promise to hasten the process of paying all your outstanding salaries within the shortest time possible."

The retailer has sacked tens of workers and shut down at least four more branches in Kenya while Kenya Power disconnected electricity supply to a number of branches that had fallen behind in paying their bills.

According to Euromonitor International, a global market research provider, Tuskys moved from being the model child of grocery retailing in Kenya, to face the same issues that brought down former competitors like Nakumatt.

Christele Chokossa, the firm's senior research analyst said the retailer's aggressive expansion over the past years (through the acquisition of some Nakumatt outlets amongst other things) turned out not to be backed with a sound financial system.

"Unpaid suppliers recently took a stand, leading to empty shelves-space across stores. Despite momentum gained by e-commerce, Tuskys is currently struggling to sustain its operations, with many consumers opting for competitors like Carrefour," said Ms. Chokossa.

"Such conditions are likely to result in a decline in overall sales during 2020. Besides, the situation reiterated debates around supply chains and retailing regulations in Kenya, especially considering that Choppies and recently Shoprite also announced plans to exit the market."

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