Guernsey Press

Blue Diamond adds to garden centre portfolio

BLUE DIAMOND is buying a further six Wyevale garden centres – saying it will help the Guernsey-headquartered group withstand any potential ‘hard Brexit’ downturn.

Published
Simon Burke, chairman of Blue Diamond. (25397235)

The £7.5m. deal is expected to complete in September, with the cost of stock, taxes and fees bringing the total outlay to £11.5m. It follows on from Blue Diamond buying nine stores from Wyevale last year.

‘These sites are all in attractive locations, have an excellent customer demographic, good transport links and will not cannibalise existing stores,’ said Blue Diamond chairman Simon Burke in an update to shareholders.

‘They thus meet the criteria I set out last year in respect of the first purchase, except that in some cases these stores are smaller and may not accommodate the full Blue Diamond offer without an extension.

‘Nevertheless, there is much potential to increase average spend and footfall, and to introduce our own offer to replace the concessions at these centres.’

Blue Diamond will also receive land by its Bicester store that could have development value in future. It was also in advanced negotiations to acquire one additional site, which it said would not add significantly to the quoted outlay.

‘As with the previous purchase from Wyevale, we anticipate that this acquisition will, over time, improve the profitability of the group well beyond the current profit being made by the centres being bought,’ said Mr Burke.

This would come from introducing Blue Diamond’s product range, focusing on its core customer and refurbishing stores. Meanwhile, the transaction is being financed through a combination of an £8m. additional borrowing facility from RBSI and from internal funds.

‘The board has been very mindful of the risks, both internal and external, which accompany this transaction. We have reviewed in detail the cash projections and considered the actions available to us should one or more of these risks materialise or our trading fall short of forecast,’ said the Blue Diamond chairman.

‘In particular, we have stress-tested covenant compliance and cash headroom in a “hard Brexit” scenario and are confident that we can continue to meet all our obligations should that happen.

‘Because of their strong cash profile, the addition of these new sites actually makes the group better able to withstand a downturn.’

He also provided a trading update for the first half of 2019, saying performance had exceeded the company’s expectations.

Total sales increased by 58% compared with the same period in 2018 and were 9% higher on a like for like basis – i.e. excluding the acquisition of the nine former Wyevale sites and the opening of Bridgford.

Total sales in the UK grew by 66% and by 10% on a like for like basis. The Channel Islands – which includes Le Friquet centre in Guernsey – recorded growth of 4%.

Richard Hemans, group finance director and company secretary, explained: ‘Channel Island sales grew by 4% in total, with sales rising by 2% in Jersey, which was lower than the rate of growth in Guernsey of 7%. Jersey was up against some very strong growth in 2018.

‘The group continues to go from strength to strength and the addition of these new stores should mean even better value and choice for our customers.’

Overall, Blue Diamond said, it outperformed the industry in terms of sales, customer numbers and average spend as reported by the Garden Centre Association.

In an upbeat assessment for 2019 and beyond, Mr Burke added: ‘Whilst there remain risks, notably the performance of the UK economy and the impact of a “hard” Brexit, I believe the group is in robust shape and will continue to outperform the industry.’