The acquisition of the Park group’s Lechlade and Cheddar garden centres won’t be the last by The Garden Centre Group...
Given that TGCG is owned by private equity giants Terra Firma, there will be ambitious plans in place to deliver value to stakeholders and a substantial pot of capital is available for expansion, reportedly through selective acquisition rather than new builds.
But how big will the group get – and how quickly will it grow? There is much speculation it will land a prize catch in the next week or two. If the hook has been baited with the Garden & Leisure group in mind, as many expect, the portfolio instantly gains seven centres and another £40 million of turnover, taking total group revenue to around £300 million. That makes it 139…just 11 stores short of 150, an initial ‘magic number’ that CEO Kevin Bradshaw may well have had in mind when he took over. There are juicy low-hanging fruit around, both single sites and groups, that would see him across that particular line, potentially adding another £30-£50 million.
Increased size, of course, creates opportunities to reduce costs through management efficiencies. TCGC’s regional managers have been in a consultation process for some weeks, so it is not unreasonable to expect some degree of slimming down. Savings will enable profit margins to be pushed, further nudging the group towards Terra Firma’s mid to long-term performance targets. Timelines are always difficult to predict, but exit strategies rarely stretch to infinity, so less than 10 years from now, if all goes to plan, TCGC will be readied for sale.
That’s one scenario. Eventual flotation is another, although the Wyevale years as a quoted company may well have tempered the corporate view about the value of this option. As we know, a business that falls prey to the vagaries of the weather, as inevitably it sometimes does, makes shareholders grumpy…and jumpy.
At this point, the crystal ball becomes even cloudier, for who can foretell what kind of transformation the business will have been through – or who will be in a position to buy it? By then, group ownership will be the norm here, as it is in several other parts of Europe. According to Mintel, 259 of the UK’s 1,000 or so garden centres are group owned – and half of those are, of course, controlled by Terra Firma. Who would bet against half the total market being in the hands of groups by 2020? That is a significant change in dynamic.
From then on, it will be a very different garden industry from the one we have today – unremittingly professional, hard-nosed, influential…and perhaps a tad less ‘lovable’ than the one we are used to.
Below: Another change happening at The Garden Centre Group, Costa Coffee in the Northampton Garden Centre. The first of many?
