Kenya’s second-largest supermarket chain, which launched an initial public offering this week, intends to more than double revenue and add at least 50 stores over the next four years.
Quickmart Plc is aiming for annual revenue of $1 billion from about 60 billion shillings ($462.4 million) this financial year, Group Chief Executive Officer Peter Kang’iri said in an interview. The retailer with 72 stores plans to increase the tally to 125, he said.
“I have a strong belief that the business should be a $1 billion company,” he said, adding that this is his “personal vision as a CEO — it’s not in the business plan or it’s not in any document with the investors yet.”
The East African nation’s modern retail-chain footprint is an estimated 500 outlets, spread over about 20 brands. Naivas Ltd. is the leading operator with more than 31% market share, followed by Quickmart at 15%, while Majid Al Futtaim Holding LLC’s Carrefour is third at 14%, according to estimates by Sagaci Research.
Quickmart will accelerate expansion to 15 stores annually from 10 to 12 in recent years, Kang’iri said. The cost of opening a new outlet ranges between 100 million shillings and 150 million shillings, he said.
The stores break even within the first month and pay back capital expenditure between 18 months and 36 months.
Quickmart doesn’t have immediate plans to operate stores outside its home market, but has registered the trademark in Uganda, Tanzania, Rwanda, the Democratic Republic of Congo and Ethiopia, Kang’iri said.
“The plan is within Kenya for now, 100%, but we still have the plan for the region,” he said. “Our vision is always to be a pan-African business. We expect to be number one, not only in Kenya, but also in Africa one day,” he said.
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Quickmart pays suppliers in 60 days, but usually sells stock within a month, providing the retailer with 30-day interest-free cash for operations and expansion, he said.
“The business is self-financing 100% of the expansion. We are basically a debt-free company today,” he said, adding that the company has only about 6.8 million shillings of debt on its balance sheet currently.
Payments to contractors building new outlets is also done over several months, further eliminating the need for borrowing, Kang’iri said.
The business has a lineup of 2 billion shillings with banks that it’s not tapping and can borrow as much as 8 billion shillings in future, he said.
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