Garden Centre Group sales up 8% in first half

The retailer has appointed Rothschild to “explore strategic options” for the business which is likely to lead to a sale, it is understood.

Margins “have improved year-on-year” and are expected to be at least 100 basis points better than the 49% reported in the first half of last year, according to the Garden Centre Group.

It said margins benefitted from a combination of improved sales performance and the Group’s strategy of investing in its own nursery operations and sourcing goods from UK suppliers, “thereby reducing its exposure to foreign exchange movements and inflationary pressure on transportation and packaging costs”.

90% of plants are now sourced in the UK versus 70% in 2008.

Garden Centre Group  said the results are strong in light of “a generally poor performance elsewhere in the horticultural sector”.

The business said it benefited from a “sharp focus on ensuring that the company has the highest quality horticultural offering at the right times of year”.

Garden Centre Group said it had a strong Easter weekend, one of the most crucial trading period for garden retailers.

Plants sales were up 14% in the six months, while gardening products rose 12%. Revenue at the group’s 91 restaurants increased 14% to £18m.

Its loyalty scheme the Gardening Club has more than 1.7 million members.

The Garden Centre Group chief executive Nicholas Marshall said: “There is no doubt that the gardening industry has benefited from the better weather this spring coupled with a late Easter.

“It would be wrong to assume that the group has done well only because of these two factors as the group has outperformed the rest of the industry that is struggling to keep up with last year’s sales. As in previous recessions people have spent more time at home and in their gardens and a trip to the garden centre is not seen as a major capital spend. Our gardening customers are also more resilient to recessions than the general high street customer.

“Our great strength is our enthusiastic, highly motivated and well trained staff who are proud of the products they sell.”

Chairman Andrew Sells said:  “Nicholas and his team have transformed this business since 2008 in difficult trading conditions.  Today, anyone visiting one of our centres will see a major realignment of the business back to what customers want: a focus on plants coupled with real horticultural expertise.

“Our shareholders and bankers have been highly supportive over the last three years and with the business is now performing well and showing positive momentum from the initiatives put in place by the management team, now it is time for the company to look at the various options going forward.”

He added that Garden Centre Group is a “unique, asset-rich retail business which is well positioned to generate significant future growth”.