The UK garden centre sector is experiencing significant challenges, affecting major chains like Dobbies and Homebase.
- Dobbies plans to close 17 stores, including all its Little Dobbies outlets, to achieve profitability.
- Homebase is seeking new investors amidst financial losses and store downsizing initiatives.
- Adverse weather and macroeconomic factors have impacted sales in the garden retail sector.
- There is a potential for market recovery as housing transactions show signs of improvement.
Dobbies Garden Centres, a prominent player in the UK garden retail sector, announced the closure of 17 stores to aim for sustainable profitability. This decision was influenced by substantial losses of £130 million last year, attributed to high inflation and unfavourable weather conditions affecting sales.
The restructuring plan devised by Dobbies, in collaboration with FTI Consulting, involves addressing historically high rental costs and implementing other cost-saving measures. These measures are intended to secure long-term future investments. However, if the proposals are not approved by creditors, an insolvency process could be initiated.
Jonathan De Mello, a property expert, highlighted issues stemming from Dobbies’ strategic decisions, such as the acquisition of Wyevale garden centres and its investment in new store formats in 2019. Nicholas Marshall, a former chief executive of Dobbies, emphasised that the business lost focus on its core customer base.
Homebase, another key player in the sector, is navigating financial difficulties by searching for new investors after experiencing an £85.2 million loss in the previous year. The company recently sold 10 stores to former owner Sainsbury’s for approximately £130 million, a move that underscores its strategic downsizing.
The DIY and garden retailer is also dealing with the expiry of a £95 million asset-based loan from Wells Fargo. Despite the financial strain, Homebase expressed optimism for the future, citing a 70% reduction in losses after the year-end and an increase in market share across various categories.
The cost-of-living crisis and unpredictable weather have been detrimental to the wider gardening sector in the UK. Emily Salter from GlobalData pointed out a decline in the DIY market due to previous home improvements during Covid-19, a weak housing market, and low consumer confidence.
However, there are some encouraging indicators as Nationwide Building Society reported increased house price growth in September, potentially revitalising consumer interest in garden products as housing transactions rise.
The UK garden centre sector, facing financial and operational hurdles, could see improvement with changing economic conditions.
