Broke Nakumatt Fails to Pay May Salaries, Shuts Down Warehouse

Last month, Nakumatt Supermarket quietly sent more than 100 of its employees on forced leave and delayed salaries of more than 1500 employees.

The delay in salaries is due to cashflow issues, which also forced the company to undertake a restructuring exercise which will lead to closure of several unprofitable branches across Kenya and Uganda.

Furious workers say they have been left without basic pay to cover rent and bills – and the retailer’s marketing director Andrew Dixon did not deny it. In an interview with NMG’s Business Daily (BD), he “promised” that the delayed salaries will be settled in a week’s time.

“We had a delay in some salary payments. The restructuring has taken longer than anticipated and affected some of our liabilities.” Said Mr Dixon.

Nakumatt maintains that cash flow challenge is a temporary issue, “and there has been a delay in completing the restructuring of its business – which involves attracting fresh capital.”

But it looks like funds have been difficult to come by for Nakumatt, possibly because of the ever-growing working capital and capex requirements having been largely funded through debt. In January, the company said it was in talks with un-named foreign fund to inject $75 Million in exchange for a 25 per cent stake, and they expected the money before the end of February, but it looks like the deal did not go through.

The employees also claimed that Nakumatt has not been “remitting statutory deductions to various agencies such as the National Hospital Insurance Fund (NHIF) and National Social Security Fund (NSSF.” Why would a company do that?

The distressed retailer last month quietly shut down one of the two warehouses where it stores imported goods as well as furniture and electronics, according to BD.

It is understood that some of Nakumatt’s major suppliers including Uniliver have stooped supplying the retailer citing non payment of dues.

It has emerged that Uniliver has cut supplies of all its products to Nakumatt Citing non payment of dues;
Blue Band
Omo
Vaseline
Soaps
etc https://t.co/QLqWwKE4f7

— Kenyanwallstreet (@kenyanwalstreet) June 12, 2017

This has led to alot of shoppers avoiding the retail store saying they encountered empty shelves during their visit. Some of the disappointed shoppers have taken to Social Media to publicly shame the company.