The future of Dobbies was again thrown into doubt following an announcement that Tesco’s garden centre chain had slumped £48m into the red after writing down the value of its stores.
The Scottish-based chain increased sales by 8% to £153m in the 53 weeks to 1 March. But it slid to a big loss from a pre-tax profit of £6.6m in the prior year, after booking £54.4m in impairments on assets, including stores. Excluding the impairments, profits were down 9% to £6m.
Analysts have suggested that several of the businesses, including Dobbies, should be sold off as Tesco tries to turn around its fortunes.
There were rumours throughout 2015 that a number of garden centre groups were interested in acquiring Dobbies with Wyevale Garden Centres being the most likely buyer.
This latest news about Dobbies’ financial position will only add to the speculation that it will be finally be sold off.
The supermarket business is still heavily weighed down by debt and needs to invest more in cutting prices and improving the quality of its food to take on the fast-growing discounters Aldi and Lidl and bigger rivals like Asda, which has also been slashing prices in some areas.
A Dobbies spokesperson said sales at established stores had risen over the year, while underlying profit and cash generation were ahead of expectations. Gross profit increased by 9.3% to £77m.
“We are pleased with our full-year trading performance in 2014-15. This demonstrates that our strategy of putting plants and gardening first is working. Our strategy remains focused on our core categories of plants and gardening, which we are confident will fuel our growth in the future.”
