Troubled retail giant Nakumatt has signed a deal with rival Tuskys to help it replenish stocks. The deal will see Nakumatt use Tuskys’ goodwill to get products from suppliers. The deal will also see managers from Tuskys’ oversee some operations in Nakumatt.
Nakumatt’s downfall has been blamed on a vicious expansion plan that lacked the backing of shrewd financial assessment and management. Stiff competition from local rivals Tuskys, Naivas and multinational entrants Walmart and Carrefour is said to have cut into Nakumatt’s revenue considerably. Economic downturn in Kenya and bad management are other factors that dug Nakumatt’s grave deeper.
Nakumatt, once a success story of homegrown business, has been facing serious financial challenges that have seen some of its branches, both regional and local, closed. Matters got worse for the retailer that one of its landlords in Nairobi raided the store and seized property over unpaid rent dues.
In Uganda, the government had to intervene and set terms for the supermarket to pay suppliers. In another case, auctioneers were forced to move in and seize property in one of its Ugandan stores after the retailer failed to pay its debts.
In July this year Nakumatt closed 3 stores at Acacia Mall – Kololo, Village Mall – Bugolobi and Victoria Mall – Entebbe. This brought to five the numbers of branches the retailer had closed in Uganda. Remaining branches are operating below capacity as shoppers are often greeted with empty shelves.
Hints of trouble showed in 2016 when major shareholders started disposing their stock. Case in point is billionaire Harun Mwau, who sold his 7.7 percent stake in the retail chain. At the time Nakumatt was looking to sell 25 percent of its shares to a strategic investor as it sought to stabilize. Since then things have been going south and it remains to be seen whether Tusky’s move will revive it or lead to a takeover.