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This research report was prepared by the Research Department of Old Mutual Securities Limited. Old Mutual Securities Limited is a securities trading company licensed by the Capital Markets Authority (Kenya) for the purpose of facilitating trade on the Nairobi Securities Exchange.

Here are our views on the news making headlines today for Kenya:
Uchumi Supermarkets has picked Julius Kipng’etich as its new chief executive, counting on the senior executive at Equity Group to lead the debt-laden retail chain back to profitability. Mr Kipng’etich has been poached from Equity, which he led as chief operating officer since 2012, having been hired from State-owned Kenya Wildlife Service (KWS) where he was the chief executive for eight years.

Our View: We are optimistic that the appointment portends well for the company that has been associated with poor management and poorly thought-out expansion heavily funded through bank loans, which strained its cash flows. A forensic audit is also ongoing to verify claims that the retailer’s staff were involved in procurement of goods and services through phantom companies that denied the retailer profit margins enjoyed by its competitors. The Kenyan retail market presents huge opportunities for the company to turn around capitalize as a New York Stock Exchange-listed research firm Nielsen early this year ranked Kenya Africa’s second biggest formalized retail economy after South Africa, in a consumer report that studied five sub-Saharan Africa economies.
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