LACK of experience, staff theft, and a lack of clear regulations are among the key issues confronting Enrich Holdings, a Basotho-owned local business, whose existence hangs in the balance.
May 10, 2023
5 min read
Employee theft rocks Enrich
Enrich Store in Maseru
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Financially, the company is currently in a catastrophic position that necessitates immediate attention and careful handling, while stock theft has become the norm.
The supermarket experienced stock shortages of approximately M1 million at one point, resulting in a loss of approximately M1 million.
Employee theft has been a big issue, with more than five employees arrested and fired on theft charges.
According to the company's chairperson's report dated April 15, 2023, a former manager once fabricated receipts and stole almost M170,000 from the store’s accounts. Employee theft remains a troubling issue to this day. During investigations that ensued, some of the employees arrested indicated how they committed theft by returning purchased products and conniving with suppliers while collecting or purchasing stock.
In an interview with Maseru Metro this week, the co-founder of Enrich Supermarkets, John Maine, who was earlier in March strategically removed from the position of Chief Executive Officer said most of the issues they face stem from a lack of skills required to run a retail business.
“The main challenge is that we lack the necessary expertise and experience in operating a retail store because we lack formal training, even at the executive level.
“Furthermore, we lack defined policies that steer the company in the right path. When we first started, it was just a hobby, and we didn't have enough money to hire qualified people to run the business,” he said.
As a result, according to Maine, some of its shareholders are unwilling to follow the established parametres and instead choose to do as they please. More than 200 people own at least 15 shares of the company.
Maine, now the former CEO, was initially suspended in the midst of all the issues; however, the suspension was later withdrawn, clearing the way for official discussions that eventually culminated in him resigning. He now serves as non-executive director.
The supermarket's first rental month after its establishment was January 1, 2020, and it cost M126 500. This came after the company paid a M461 000 security deposit for the lease signing.
According to reports, it was agreed that the rent would increase by 8% every year, therefore the company is currently paying M180 000 per month in rent.
To date, the company has paid the landlord M6.5 million.
Maine said the company is considering selling their gymnasium in order to improve their financial position.
“We are selling the gym for around M1 million so we can invest in other areas. I believe the company will be in a much better and stronger financial position in the next six weeks,” Maine said.
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Enrich Fitness and Enrich Creatives were founded to financially support the supermarket and diversify income streams.
At the outset, the combined expenditures of launching these projects were less than M1.2 million, which was much less than the cost of launching a new store. According to the chairman's report, the board of directors decided that it was critical to develop alternate revenue streams other than relying entirely on the supermarket.
As a result, management brought the gym and innovative efforts to the board for approval, which they received. However, it was determined that the initiatives were under-budget due to client expectations and necessitated extra equipment worth M650 000 in addition to the original M1.2 million.
As a result, the company went into debt, and the founders advocated selling their shares to fund these new ventures. As things stand, the company has not made any significant profits from these ventures and has been unable to repay loans in full; as a result, the company has opted to sell these enterprises in order to recover all cash and stabilise the supermarket.
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