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| Kenyan Shoprite Supermarket. File |
Shoprite Supermarket CEO Pieter Engelbrecht hints that the giant retailer will cease from doing business in Kenya.
Shoprite withdraws its business ventures and relocating to Tanzania or Uganda. Their move comes after unending wrangles between KRA, landlords and increased losses.
Shoprite and Choppies retailers are set to exit the Kenyan market, citing unprofitability. The move will leave France’s Carrefour as the only foreign-owned large scale retailer in Kenya.
South Africa owned Shoprite and Botswana owned Choppies are gazing at legal battles that could further depress their loss-making outfits as the taxman and one of their landlords are demanding millions of shillings before any exit can be approved.
Shoprite’s three-month termination of a lease with Karen Waterfront expires on Wednesday.
The retailer is fighting an Sh520 million claim from its Karen landlord. In April, Shoprite revealed that it was reviewing its unprofitable operations such as East Africa with the view of cutting its losses through an exit.
The retailer’s branches at Thika Road’s Garden City, Westgate Mall in Westlands and City Mall in Nyali are still operational.
Shoprite claims that Karen Waterfront tricked it into believing that other tenants at the mall would be banks, telcos, clothing stores and ATMs.
According to Daily Nation, it signed a 10-year lease in November but just six months later, it wrote to Karen Waterfront’s owners claiming that it did not see any chances of business improving hence wanted to leave.
Crossroads Limited and Karen Waterfront Phase Two Limited, the mall’s owners, have now sued Shoprite, demanding that the retailer be compelled to pay Sh520 million, an equivalent of 10 years’ rent.
The mall’s owners also want the amount to attract interest and be paid before Shoprite is allowed to leave.
Crossroads Limited and Karen Waterfront are owned by the family of the late billionaire poultry farmer Nelson Muguku.
The retail chain entered Kenya through the purchase of Ukwala Supermarkets in 2016 for an estimated Sh1 billion.
Now Choppies’ offloading of the branches it acquired has also caught the taxman’s gaze as KRA claims Sh125 million.
KRA says Choppies has not disclosed crucial details of the branch sales and has issued agency notices to the retail chain’s bankers and Quicksmart.
Court documents, however, reveal that Choppies has Sh36 million in the Standard Chartered account that the KRA has attached, while the cost of the branch sold to Quickmart remains a secret only known by the two retailers in the sale transaction.
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