Naivas records US$14.7M profit amid rising costs, competitive retail market

KENYA – Naivas, Kenya’s largest grocery retailer, reported a KSh 1.9 billion (US$13.4 million) profit after tax for the fiscal year ending June 2024, marking a 19.6% drop from the KSh 2.3 billion (US$17.8 million) profit it recorded in 2023. 

This decrease in profits comes despite a 3.6% rise in sales, which reached KSh 91.9 billion (US$712.4 million), continuing an upward trend in revenues since 2020. 

Naivas attributes the profit decline primarily to rising expenses, which surged 4.2% to KSh 90.2 billion (US$699.2 million), according to the company’s annual report from the IBL Group, the Mauritian conglomerate holding a majority stake in the retailer.

IBL Group CEO Arnaud Lagesse acknowledged Naivas’ performance in the report, highlighting the retailer’s resilience amid challenges including the depreciation of the Kenyan shilling, political unrest, and heightened competition. 

“Naivas has shown strong growth, despite facing these challenges,” Lagesse noted.

Strategic expansion and market leadership

In 2024, Naivas expanded its footprint to 107 stores across Kenya, reinforcing its position as one of the country’s largest retailers. 

Over the past few years, Naivas has aggressively acquired prime retail spaces, often close to populous residential areas, to capture a wide customer base. 

The company’s growth in store count and infrastructure coincides with the decline of former giants Uchumi, Tuskys, and Nakumatt, whose market shares have dwindled due to mismanagement and high debt.

Despite its expansion, Naivas faces increasing competition from Quickmart and Carrefour, both of which are ramping up their physical and online presence to attract Kenya’s growing consumer base. 

In response to shifting lifestyles and urbanization trends, Naivas recently adapted to the emerging 24-hour retail model, especially in high-demand urban areas like Nairobi, where a second store in the bustling Kilimani neighborhood was recently inaugurated. 

Naivas Chief of Strategy Andreas Von Paleske emphasized that the move aims to cater to customers’ needs for more flexible shopping options.

Rising costs and asset management

Naivas’ total assets experienced a slight 0.3% dip to KSh 31.3 billion (US$242.6 million), while liabilities saw a 1.25% decrease to KSh 24.4 billion (US$189.1 million). 

The increased operational costs, attributed to factors like rising inflation and currency depreciation, have squeezed profit margins despite the chain’s growth in revenue. 

The company’s financial health, however, remains steady, bolstered by its dominant market position and the ongoing support of IBL Group.

IBL Group’s expanding influence in East Africa

The IBL Group’s stake in Naivas has positioned it as a leading retail player in East Africa, a region that now contributes significantly to the Group’s revenue. 

In August 2023, IBL Group, through its subsidiary Mambo Retail, raised its ownership in Naivas to 51%, marking its full consolidation of the Kenyan retailer. 

East Africa’s Commercial & Distribution cluster generated 35% of IBL Group’s total revenue in 2024, a marked increase from 2023 when Naivas and Harley’s had not yet been consolidated. In the same period, IBL’s Indian Ocean operations accounted for 44% of its total revenue.