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Tesco sells Dobbies garden centres Tesco again scales back 24-hour trading, with 2,000 jobs put at risk
(about 4 hours later)
Tesco has sold the UK’s second largest garden centre chain, Dobbies, for £217m, in the latest of a string of disposals. Tesco has ceased 24-hour trading at another tranche of supermarkets as part of a shakeup that puts 2,000 jobs on the line.
The 150-year-old business, which runs 35 garden centres across Scotland, England and Northern Ireland, has been sold to two private investment groups, Midlothian Capital Partners and Hattington Capital. The sale attracted interest from Dobbies’ rival Wyevale Garden Centres, Britain’s biggest gardening chain with 153 outlets, Edinburgh Woollen Mill and private equity houses CVC and Carlyle. The supermarket has begun a 45-day consultation with night shift workers and with staff displaced by plans to merge customer service counters. It said 46 stores are affected by the changes, with 20 ceasing round-the-clock trading.
Tesco shares rose 1.7% to 155.23p on the news. It comes as Tesco also confirmed the sale of Dobbies, the UK’s second largest garden centre chain, for £217m to two private equity houses.
Tesco bought Dobbies for £155m in 2007 when Sir Terry Leahy was in charge, its first non-food acquisition. The Scottish-based business slid £48m into the red last year after writing down the value of its stores, even though sales rose 8% to £153m. The deal with Midlothian Capital Partners and Hattington Capital is the latest in a series of asset disposals by the Tesco chief executive, Dave Lewis, and helped send shares up 1.7% to 155.23p.
The new owners vowed to protect jobs at Dobbies, which employs more than 200 people, and to keep its head office in Lasswade near Edinburgh. In January Tesco halted 24-hour trading at 76 of its biggest stores. The latest bloc of 20 will leave just over 300 operating through the night. “We’re making some changes to the way a small number of our stores operate to help us run them more simply and deliver the best possible service to customers,” said Tesco’s UK chief operating officer, Tony Hoggett. “Where there have been changes to a colleague’s role we will work with them to ensure they are fully supported.”
“It’s a truly iconic Scottish business,” said Andrew Bracey, a founding partner at Midlothian and a former finance chief of online grocer Ocado. He said it had been well looked after by Tesco, which invested heavily in the stores and modernised them with a Scandinavian-type design, as well as opening 17 new outlets. A Tesco spokesman said it would aim to redeploy staff to a new role within their existing store or to a local branch, but redundancy was also an option.
Barney Burgess of Hattington Capital, who worked for Tesco for eight years, said he “learned a huge amount – it was an invaluable part of my career” but added that it “had its highs and lows”. Dobbies was Tesco’s first non-food acquisition, bought for £155m in 2007 when Sir Terry Leahy was in charge. The Scottish-based business slid £48m into the red last year after writing down the value of its stores, even though sales rose 8% to £153m.
Tesco’s chief executive, Dave Lewis, who was brought in two years ago to turn Britain’s biggest supermarket chain around, has been selling off under-performing smaller divisions to focus on the main UK grocery business. The new owners said they had a plan for growth and vowed to protect jobs at Dobbies, which employs 2,869 people. They intend to keep its head office in Lasswade, near Edinburgh. New store openings are planned across the UK, from Scotland to places including Oxford and Winchester in the south.
He said: “It was a difficult decision to sell the business, but we believe this agreement will give Dobbies a bright future, while allowing our UK retail business to focus on its core strengths.” “It’s a truly iconic Scottish business,” said Andrew Bracey, a founding partner at Midlothian and a former finance chief of online grocer Ocado. He said Dobbies had been well looked after by Tesco, which opened 17 new outlets and invested heavily in the stores, modernising them with a Scandinavian-style design.
The garden centres are more than just plant nurseries – they also boast restaurants, homewares and food halls and promise a “family day out”.
Barney Burgess, a partner at Hattington Capital who previously worked for Tesco as commercial director and also ran the supermarket’s home delivery service, will work on expanding Dobbies’ online platform.
He said in his eight years at Tesco that he “learned a huge amount – it was an invaluable part of my career” but added that it “had its highs and lows”.
Lewis, who was brought in two years ago to turn Britain’s biggest supermarket chain around, has been selling off underperforming smaller divisions to focus on the main UK grocery business.
He said it had been “a difficult decision” to sell the business, but added: “We believe this agreement will give Dobbies a bright future, while allowing our UK retail business to focus on its core strengths.”
The deal comes a week after Tesco announced the sale of its lossmaking Giraffe restaurant chain and its Turkish retail business, Kipa. It also offloaded its South Korean chain for £4bn in September to cut debt. The lossmaking Harris + Hoole coffee shop chain could be next.The deal comes a week after Tesco announced the sale of its lossmaking Giraffe restaurant chain and its Turkish retail business, Kipa. It also offloaded its South Korean chain for £4bn in September to cut debt. The lossmaking Harris + Hoole coffee shop chain could be next.
Graham Spooner, investment research analyst at retail stockbroker the Share Centre, said: “Investors may be encouraged by this activity as the supermarket takes further steps towards recovery.Graham Spooner, investment research analyst at retail stockbroker the Share Centre, said: “Investors may be encouraged by this activity as the supermarket takes further steps towards recovery.
“However, we still regard Tesco as a no more than a ‘hold’ for the time being, as long term prospects remain uncertain. The FCA investigation into financial misconduct, following the accounting scandal of 2014, is likely to continue for some time, while margins continue to be squeezed by competition from discount brands such as Aldi and Lidl.” “However, we still regard Tesco as no more than a ‘hold’ for the time being, as long-term prospects remain uncertain. The FCA investigation into financial misconduct, following the accounting scandal of 2014, is likely to continue for some time, while margins continue to be squeezed by competition from discount brands such as Aldi and Lidl.”
Tesco is due to give an update on trading next Thursday.