(Reuters) – Kenya’s Uchumi Supermarkets Ltd posted on Friday a 19 percent drop in pretax profit in its first half, hit by a fall in sales which it blamed on rising inflation and a deadly Somali militant attack on a Kenyan shopping mall.

The firm, Kenya’s second-largest retail chain with stores in neighbouring Uganda and Tanzania, said profit before taxes fell to 106.9 million shillings ($1.24 million) in the six months ended December.

Net sales slipped to 7.29 billion shillings from 7.59 billion shillings the previous year.

“In the first half of the 2013/14 financial year, east African economies performed below expectation,” the company said in a statement.

It said lower-than-expected government spending hurt private sector spending, while rising inflation in Kenya, the region’s biggest economy, placed a strain on disposable income.

“Insecurity in Uganda and Kenya continued to impact negatively on retail business following terrorist threats and actions during the period,” Uchumi said.

Al Qaeda-linked militants attacked an upscale shopping mall in the Kenyan capital in September, killing at least 67 people in an assault that struck a high profile symbol of Kenya’s economic growth. Uchumi did not have an outlet in the Westgate mall.

Uchumi said it expected to complete a rights issue in the second half of its 2014 financial year to fund expansion.  ($1 = 86.3500 Kenyan shillings) (Reporting by Richard Lough)

Source:Reuters