Nakumatt Employee Salaries For May Yet To Be Paid

Nakumatt Supermarket, the largest retail chain in Kenya, is in deep financial woes which seem to have escalated over the last one month, causing delayed payment of salaries to their employees for more than two weeks.
Nakumatt, which runs the highest number of outlets within the East African region had not paid their 1,555 employees their May salaries by Monday this week. The supermarket has also sent more than 100 employees on compulsory leave, all contributed by low business volumes.
The Root Of The Problem
The management of Nakumatt, which has over 5,700 employees has cited the cause of the financial strain to be a delay in completing the restructuring of its business which typically involves attracting fresh capital, which has seen it fail to honour this monthly liability on time, leaving its staff in financial strain and distress.
Statutory Returns
Some staff members of Nakumatt told the Business Daily that the supermarket has not been remitting statutory deduction to various agencies such as NHIF and NSSF, but Nakumatt insists that they are up to date.
Shut down of some branches
Some Nakumatt branches have already been shut down and the supermarket is planning to shut down more down performing branches.
On June 6, hundreds of employees at Nakumatt’s Mombasa warehouse were forced to break, due to a dip in supplies that had left the employees “idle” for weeks.
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The Marketing Director’s report
Speaking to the Business Daily, Andrew Dixon, Nakumatt’s marketing director said that they had a delay in some salary payments. This he said was caused by the restructuring process which seems to have taken longer than they had anticipated.
The management also said that they had informed their employees on the delay and was “working to ensure that everybody receives their salaries this week.
Nakumatt Debt
In the recent years, Nakumatt has been on a debt-funded acquisition spree that saw it take up space in multiple new malls, increasing financial costs and disrupting cash flow.
No Supplies For Nakumatt
Due to this debt, Nakumatt’s big suppliers such as Unilever have stopped making stock deliveries to the supermarket. Nakumatt says that they are awaiting 7.7 billion cash injection from an unnamed private equity fund, but this has not stopped stocks from disappearing from its shelves.
Closed outlets in Uganda
Business is still bad for Nakumatt in Uganda with some stores being closed. This move has seen suppliers and landlords sue Nakumatt for non-payment of Sh 515 Million.
Bright Rwamirama, Uganda’s minister for veterans last week took Nakumatt to court seeking to be paid Sh 58.6 Million in rent arrears that he and other partners are claiming from Nakumatt for use of their premises in Mbarara. The outlet was forced to close.
As Nakumatt anticipates the capital injection, they have sought to close down non performing branches which has resulted to one of two warehouses where it stores imported goods, furniture and electronics closed. The warehouse is located along Mombasa Road.
Compulsory Leave
Last week, Nakumatt’s HR team summoned employees at its headquarters and asked them to fill compulsory leave forms, promising to recall them later.
The future of Nakumatt
This is not a permanent situation for Nakumatt, according to its management. When the anticipated refinancing happens, they are hoping to be better placed in terms of stock and they shall recall the staff they sent home.
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Complied by Susan Gitonga, a Communications Officer at Career Point Kenya. Email : susan@www.careerpointkenya.co.ke
Source: Business Daily