Wyevale Garden Centres unveils new strategy after full-year profits dive

The private equity owned retailer racked up losses before tax of £117.8m in the twelve months to December 31, 2016, compared with pre-tax profits of £7.2m the previous year.

Operating losses came in at £74.1m – sliding from operating profits of £48m in 2015.

It’s EBITDA slumped 31% to £29.1m.

The garden centre firm, with 149 UK stores, said operating costs increased due to acquisitions, additional rental expense from sale and leaseback transactions and investment in people, including the impact of the national living wage.

Sales rose 5.5% year-on-year to £328.3m, but like-for-likes slipped 2% during the period. 

Its gross margin reduced by 1.8 percentage points owing, it said, to higher clearance activity.

Last month, Retail Week reported that the company was on the brink of securing new funding.

Wyevale – owned by Guy Hands’ Terra Firma Capital – delayed issuing its full-year accounts until a refinancing deal with Hayfin and Barclays was in place, putting the retailer on a stronger footing. 

Speaking exclusively to Retail Week earlier today, chief executive Roger Mclaughlan – former boss of Toys R Us in the UK – said the completion of the refinancing process is “really good news”, enabling the business to “get on” and deliver its new strategy.

Looking ahead

In the wake of falling profits, the retailer has today revealed a new strategy.

With a new leadership team now in place, the firm is working to deliver a “more compelling” customer experience. It also plans to invest in its people, upgrade its systems and improve its supply chain process.

“We need to make the company more customer focused than it has historically been. This is where we can gain competitive advantage”

Roger Mclaughlan, Wyevale Garden Centres

Keen to focus on the future, Mclaughlan told Retail Week the strategy will allow colleagues to spend “less time on laborious tasks” and dedicate more time to serving and advising customers.

“We need to make the company more customer focused than it has historically been,” he said. “This is where we can gain competitive advantage.”

Over the last 12 months, Mclaughlan and chief financial officer Anthony Jones have begun the process of improving the customer experience, which the retailer said helped it achieve its highest net promoter score to date. 

This was also reflected in the return to growth in Wyevale’s like-for-likes during the second half of 2016.

Mclaughlan also revealed plans to roll out a new EPoS system at the start of next year.

He said: “At the heart of our new strategy is enhancing our customer experience by focusing on building and strengthening the fundamentals of our business.

“There’s been a significant shift in our financial priorities away from acquisitions and other capital-intensive growth initiatives to investment in the core infrastructure, systems and processes required to develop a scalable and sustainable platform to underpin the group’s future growth plans.”

Wyevale chairman Justin King – the former Sainsbury’s boss – described 2016 as a transitional year.

He said: “In order for the business to achieve sustainable growth a change of strategy, and a change in the leadership team to implement it, was needed as a critical first step.

“During 2016 the team made significant progress in setting out this new strategy and in dealing with legacy issues, particularly stock.

“I am pleased to note that this progress has continued throughout the year and with the successful completion of the debt refinancing, we now have a more stable capital structure to support the business’ needs.”