Tuskys closes all five of its Ugandan branches ahead of probable exit

Tuskys, the Kenyan supermarket chain struggling under debt, has now closed all five of its branches in Uganda. The closures, prompted by significant debts are likely to lead the retailer to exit Uganda after 11 years.

Tuskys has shut down its branches at Bugolobi, Nakulabye, Makerere, Ntinda and Kitintale in Uganda. The company employs 150 people in the country, where it has operated for 11 years. Tuskys entered Uganda after purchasing local supermarkets Good Price and Half Price.

According to Ugandan media, the flagship branch in Ntinda alone has accumulated debt of around $100,000-$250,000. Some of that debt is owed to the landlord, who says the retailer was paying $14,000 a month in rent.

Tuskys’ exit would mean the international supermarket chains in Uganda would be Carrefour and Shoprite. Shoprite, which entered Uganda in 2000, has five branches in the country. In 2018 it opened its first branch outside Kampala, a 2,800m² supermarket in Entebbe. Its presence in Uganda may be under review as the South African retailer has decided to exit Kenya (and previously exited Tanzania in 2014).

Majid Al Futtaim opened its first Carrefour store in Uganda in January 2020, after months of delays. The first store, in Kampala’s Oasis Mall, should be joined in 2020 by a 3,400m² outlet at Kampala’s Metroplex Mall. At the time of the launch of the Oasis Mall store, Majid Al Futtaim revealed three more stores were planned to open within the next three years.

Uchumi and Nakumatt, both Kenyan chains, also left Uganda after financial difficulties. Before its exit in 2017, Nakumatt operated nine stores in Uganda. Seven of those were in Kampala and one each in Entebbe and Mbarara. Shoprite ended up moving into three of those vacant stores. Uchumi exited Uganda in 2015, filing for bankruptcy after five years of losses.

If Shoprite does to stay in Uganda, the exit of Tuskys should provide a short term boost to sales: Tuskys was Shoprite’s main competitor. The more important question is whether the Tuskys stores are worth taking over. When Nakumatt exited, Shoprite was highly selective about what it took on – as has been the case in Kenya with supermarket chains picking up Nakumatt’s old network. As it stands we don’t think all five Tuskys stores will be picked up by Shoprite or Carrefour and there is no obvious other party in the mix to enter Uganda on the back of a Tuskys exit.