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’s Shoprite and Botswana’s Choppies, however, are staring at legal battles that could further dent 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 a 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.
10-YEAR-LEASE
Shoprite claims that Karen Waterfront tricked it into believing that other tenants at the mall would be banks, telcos, clothing stores and ATMs.
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 Muguku family business had Shoprite as its anchor tenant at Karen Waterfront, and has now faulted the retailer for jumping ship and rendering employees redundant.NO EVIDENCELast week, High Court judge Justice David Majanja dismissed Karen Waterfront’s request to have Shoprite deposit the disputed Sh520 million in court pending the case’s outcome.The judge argued that no evidence has been shown to prove that Shoprite is offloading its other assets in Kenya, which in this case is the three branches left operational.The retail chain insists that the lease agreement was between Karen Waterfront and Shoprite Checkers Kenya Limited, a local firm, and that there was no need to enjoin foreign directors who do not own shares. Justice Majanja agreed and has now struck the directors off the list of defendants.The Muguku family had enjoined Shoprite’s directors – Andrew Mweemba, Kruger Morkel Danie, Anton Andrew Wagenaar, Anton De Bruyne, Izan Joham […]
