Uchumi Supermarkets has disclosed that it was technically insolvent to the tune of Sh7.05 billion as at June 2025, ahead of its first shareholder meeting in eight years.
This represents a massive 106.74 percent jump from a negative equity position of Sh3.41 billion as at June 30, 2017 and reflects accumulated losses and liabilities that heavily weighed down the retailer’s recovery prospects.
The company, in its latest annual report for the financial year to June 30, 2025, said despite the improvement in its operational performance, it continues to carry significant historical liabilities that have accumulated over previous years, pushing it into a the deeper negative equity position of Sh7.05 billion.
‘The board and management remain committed to addressing these legacy obligations through ongoing restructuring efforts and continued improvement in operating performance,’ the company says.
A negative equity position occurs when a company’s total liabilities exceed its total assets, resulting in a negative net worth or book value. This financial state often signals distress, caused by prolonged operating losses, heavy debt, or massive asset write-downs, and can indicate insolvency.
Over the last eight years (2018-2025), Uchumi, which is owned 14.7 percent by the National Treasury, has been in a sustained critical financial crisis, characterised by technical insolvency, massive accumulated losses, and reliance on a court-supervised debt restructuring plan called Company Voluntary Arrangement which is an agreement between the company and its creditors.
However, as of late 2025, the company has shown flashing signs of a recovery driven by a shift from a retail business model to a rental income model.
As a result of the improvement in revenue and the continued implementation of strict cost management measures, Uchumi reported a rare profit of Sh8.7 million for the year ended June 2025 marking a turnaround from a loss of Sh 167.8 million recorded in the previous financial year, largely driven by rental income.
‘This improvement reflects the positive impact of management’s restructuring initiatives and the board’s continued focus on restoring operational stability,’ the company says.
‘While the group continues to face legacy financial challenges, the improvement in operating performance recorded during the year demonstrates that the recovery strategy is gaining traction.’
This marks the first time in years that the debt-ridden retailer has posted a profit, even as it faces the risk that the outcome of the legal battle with the Kenya Defence Forces over the ownership of 17-acre land in Kasarani, Nairobi, could make or break its revival.
Uchumi’s CVA framework, a key component of the group’s financial restructuring strategy, was set up in March 2020, providing a roadmap for settling preferential and unsecured debts over a six-year period ending June 2026.
The company is set to hold its first annual general meeting (AGM) in eight years this month, on April 29, where shareholders are expected to receive and adopt financial statements for the eight financial years from June 2018 to June 2025.
The company last held an AGM in March 2018 at a time when there was optimism that it would secure a strategic investor to inject Sh3.5 billion capital to help its turnaround.