Uchumi Supermarket is waging what could be its final battle for survival. A company that once defined modern retail in Kenya is today navigating a fragile comeback strategy, anchored in a combination of property redevelopment, court appeals, and strategic leasing.

Central to this effort is the transformation of its Lang’ata Hypermarket into a shopping mall, an initiative that has already seen the onboarding of Chinese retailer China Square.  The move has sharply lifted Uchumi’s income streams and sparked renewed trading interest on the Nairobi Securities Exchange, even as billions in debt continue to shadow its path.

The lease agreement with China Square, signed in 2024, marked a turning point in the company’s post-insolvency recovery efforts. In the year to date 2025, Uchumi’s other incomes surged by 498 per cent to Sh44.99 million, up from just Sh7.53 million in 2024.

The bulk of this increase was driven by rental proceeds, particularly from China Square’s lease of the mall’s main hall. The deal was strategic, bringing in reliable income even as Uchumi struggled to meet its primary retail obligations.

 “The conversion of Lang’ata Hyper into a mall was underway, progress is hindered by a legal dispute with tenant Hotspot. Currently, the mall hosts 10 tenants, and China Square began lease payments in December 2024,” the company administrator notes in a report. 

However, the rental income still fell 20 per cent below budget due to delays in construction, a direct consequence of a legal dispute with a tenant identified as Hotspot. The dispute has stalled full development of the Lang’ata site, especially on the front end of the property where further rentals were anticipated.

Despite these challenges, Uchumi’s revenues for the first half of 2025 reached Sh86.29 million, reflecting a 67 per cent year-on-year increase. Yet, this figure is 22 per cent short of the Sh111 million budgeted for the period, again largely due to the Lang’ata construction impasse. The court case with Hotspot has become a bottleneck, not only for future leasing opportunities but for Uchumi’s broader efforts to modernize its assets and grow cashflows.

The underperformance of the Lang’ata outlet in particular was flagged as a key reason behind the revenue gap. Still, the company has maintained lean operations, with expenses (excluding depreciation) rising by only 28 per cent year-on-year and remaining 9 per cent under budget. Depreciation was down 9 per cent compared to 2024, underscoring limited new capital investment and a cautious asset turnover policy.

At the heart of Uchumi’s turnaround blueprint is a dual strategy: convert legacy retail outlets into commercial rental spaces, and simultaneously shift to a business-to-business sales model.

While the retail space continues to see foot traffic decline, the Lang’ata mall currently hosts 10 tenants and has reopened its Unicity branch after renovation.

A new 1,000 square foot container shop has also been launched and stocked at a cost of Sh8 million. The company has yet to fully operationalize its online store, but optimisation of its bakery segment is underway, targeting a new distribution-led model. These steps indicate Uchumi’s attempt to pivot away from traditional retail dependency and diversify revenue streams, though many of these ideas remain in early execution stages.

Largest financial bet

The largest financial bet Uchumi is placing lies in the sale of its 17-acre Kasarani property. According to its Monitor’s report to the High Court, the land could fetch a net value of Sh1.31 billion.

The proceeds from this deal are earmarked for the final tranche of creditor payments. However, the land is the subject of an ongoing legal dispute between Uchumi and the Kenya Defence Forces, who currently occupy it.

The company argues that it holds a valid title, backed by prior investigations from the Office of the Attorney General and the Director of Public Prosecutions. The High Court previously ruled against Uchumi, prompting the company to file an appeal. “In the matter between Kasarani Mall Limited (KML) and KDF, the company holds the view that it has very strong grounds for appeal. That the Learned Judge, in arriving at his decision ignored wholly the weight of the evidence that was adduced specifically that an investigation was conducted by the Office of the Attorney General and the Director of Public Prosecution who confirmed Kasarani Mall Limited has a valid Title,” the administrator wrote to the court.

 He cautioned that should the appeal fail, the company would be unable to complete the revised Company Voluntary Arrangement (CVA). Without the expected income from Kasarani, the supermarket chain may have no other choice but to proceed to liquidation. 

“In the event the appeal is unsuccessful, the revised CVA cannot be implemented with the only option available being to liquidate the company,” said the administrator. The significance of the Kasarani property cannot be overstated. It is the only asset whose disposal would raise enough capital to address remaining creditor obligations. In total, Uchumi owes nearly Sh9.8 billion to a combination of banks, government lenders, pension schemes, KRA, staff, and trade creditors.

Even with the conversion of some government and Kenya Development Corporation loans into non-interest-bearing long-term instruments repayable from 2026, the remaining unsecured debt is overwhelming. Trade creditors alone are owed over Sh4.5 billion, while unpaid provisions and other liabilities bring the total to more than Sh6 billion under unsecured classification.  The supermarket’s overall deficit stands at Sh8.4 billion, after factoring in the total liabilities against asset realizations and paid-up capital.

Yet despite this, the capital markets have begun to show signs of renewed interest in Uchumi. After trading at 19 cents for nearly five years, its share price has risen to 36 cents in recent months.

This doubled the company’s market capitalisation from Sh63 million to Sh131 million. The uptick suggests that investors are watching Uchumi’s recovery efforts closely and perhaps pricing in the potential win in the Kasarani appeal or further gains from the Lang’ata redevelopment.

The company’s efforts to present itself as compliant and transparent have also improved. Uchumi has filed its annual returns up to 2024, is current on KRA obligations, and is under supervision by both the Capital Markets Authority and a newly appointed account manager. It now has a compliance officer dedicated to meeting Nairobi Securities Exchange requirements.