Blue Diamond garden centres have released their Report and Accounts for 2021.  The financial headlines are that profit before tax was up 68% to £39.5m on sales up 27% to £255m.

Managing Director Alan Roper says in the report:  "Perspective and context are important when evaluating our sales performance in 2021. One needs to understand the factors that powered the sales growth in order to challenge the sustainability of the recent sales boom. Therefore, what follows is an analysis of our like-for-like sales (LFL) performance - I have stripped out all our Wyevale acquisitions from the analysis.

"From 2017 to 2019 average spend grew by approximately 3% a year. The average basket spend was £23.71 in 2017 and by 2019 the figure was £25.80, an increase of 9%. In 2021 the average spend had ballooned to £34.50, an increase of 33.7% over 2 years. This inflated spend was driven by consumers directing disposable income to their homes and gardens because Covid rules were restricting time spent on over activities, such as holidays. The net impact is that Covid probably generated an extra £22m of garden centre turnover in 2021. The year ended with Garden Centre turnover up by £49m (27%). Without Covid sales probably would have been up around 13%.

"There is no question in my mind that this inflated average spend will deflate in 2022 as people return to their unencumbered routines, such as holidays."

Simon Burke, Chairman of Blue Diamond had two key messages for shareholders this year:

• In 2021 we achieved an extraordinary result, but this was still significantly affected by the pandemic in terms of closures, trading and government financial support;
• Although we expect a fall in profit in 2022, we will nevertheless emerge from the pandemic period stronger, more profitable and with a much better balance sheet than we had in 2019.

"The market in potential acquisitions has been particularly active in the past 9 months, and we have reviewed numerous centres that were for sale. We continue to be highly selective, and since the year-end have concluded just one purchase, this being the Blackdown centre just outside Taunton. We plan a major redevelopment of this freehold centre in the summer.

"We are also considering several other opportunities and I expect that we will conclude more acquisitions during 2022. We will keep our focus on quality sites that serve catchments for which the Blue Diamond offer is well suited. We will also be mindful of managing debt within conservative limits."

Blue Diamond year end net debt in 2021 was just £5.8m which is 0.1 times EBITDA and a gearing ratio of 4%.

Alan Roper also commented on capital investment and thier new warehouse development: "Our capital investment programme, which was suspended in 2020, was resumed in 2021 with £11.9m being deployed predominantly across the Wyevales to bring the quality of the stores to the Blue Diamond standard. In addition, we increased the retail footprint of our Newbridge Centre by 2,700 sq m.

"The exponential growth has presented considerable challenges in managing our supply chain and we outgrew our third-party

central distribution company. Therefore, I decided that securing our own central warehouse facility was our best option as it suits our entrepreneurial, operational style. The site is located near our centre at East Bridgford and was established last March. In a very short time, it has developed into a well-managed facility."

Located in Newton, 2.5 miles from East Bridgford garden centre, the warehouse has proved to be an invaluable asset for Blue Diamond. It benefits from a central position in the country and has good access to the main transport network. It forms the new hub for all shopfloor stock and handles direct import goods from the far east, including furniture, seasonal goods, fashion, and selected gardening products.

Secured by the Blue Diamond Group in March 2021, it was formerly used by John Deere to store large agricultural vehicles and machinery parts.

Prior to that, both buildings were originally hangars forming part of RAF Newton. During WW2, RAF Newton was initially a base for bombers such as the Vickers Wellington. It then became a flying training school, providing basic and advanced training for Polish airmen serving with the RAF.

Read the full Blue Diamond Report and accounts for 2021 using this link