Blue Diamond group reveals acquisition goals

Blue Diamond eyeing leaseholds as well as freeholds.

Alan Roper: Wants to let the industry know Blue Diamond is acquisitional and talk to people interested in selling (HW)
Alan Roper: Wants to let the industry know Blue Diamond is acquisitional and talk to people interested in selling (HW)

Blue Diamond has said it wants to buy two garden centres a year from now on, but is keen to take on leaseholds where the owner becomes the landlord.

The 17-centre group's managing director Alan Roper said: "You don't have to lose your business and you can still get a good income. The plan is for two centres a year freehold or leasehold where the owner of the garden centre becomes a landlord. We want to let the industry know we're acquisitional and would like to talk to people interested in selling. Some don't mind who they sell to but others want their business to go to a good home and don't necessarily want to sell the property."

Blue Diamond bought Newbridge as a freehold in February 2015 and Trelawney as a leasehold in November 2014. Roper said Trelawney owner David Danning wanted to stay in touch with the industry and asked whether he could keep a role. Blue Diamond offered him the position of part-time garden features buyer and is also still working with him on the planned Probus garden centre site in Cornwall, which is in planning after being modified to Blue Diamond concepts.

Roper added: "It's worked well for David. He kept the name of his business over the door and he still works in the business. It's a nice story for other people in the business who also want to do a similar thing."

Blue Diamond is also working on a rebuild of Fermoy's Garden Centre in Devon that Roper hopes will open in spring 2017, an extension at Evesham, also for 2017, and to redevelop Spalding. As more independents are bought by groups, Roper said consolidation is "obviously inevitable to a degree and is happening relatively quickly". He added: "There's not a door in the industry that Wyevale has not been banging on."

Roper said Tesco deciding not to sell any more businesses, such as Dobbies Garden Centres, is "significant" and shows that Dobbies will start to become more expansive, through acquisitions or new-builds, and may use Tesco's land banks.

Blue Diamond is using land agents to find new-build opportunities. Roper said new-builds can pay despite Notcutts pulling out of a planned Bagshot new-build because it is unviable. Roper said: "Redfields was a new-build - they can pay. But you have to make sure you're in the right location and get the right target customers."

The £83m-turnover Blue Diamond group surveyed 50,000 customers, finding 80 per cent turned out to be from ABC1 demographics and 50 per cent were AB1, which "shows we are being fairly successful at targeting that demographic".

HTA figures show AB1 average spend per household at £250 per year but lower down is a third of that. However, Roper said bringing in concessions does not suit his chosen demographic.

Wyevale Garden Centres saw a 25.7 per cent rise in concession incomes to £18.1m in 2014 and Roper said: "It's pretty clear they want town retailing in their garden centres, which means a lot of concessions. But if you ask for high street retailing in a rural location some planners will say no."

Concessioning is "flavour of the month" with independents such as Highfields and Hillier at Horsham putting up buildings to house other retailers. He added: "We're getting to the point where it is giving indigestion. I feel sorry for some garden centre customers. They go to garden centres for a reason and don't come for the high street experience in my view."

BLUE DIAMOND: Record sales and profits in first half of 2015

Blue Diamond has reported record sales and profits for the first six months of 2015. The 17-garden centre group had growth of 19 per cent, with five per cent on a like-for-like basis, and saw profits rise by 77 per cent.

Income was split 50/50 between gardening and non-gardening. Overall annual sales are expected to reach £83m by the end of the year.

Managing director Alan Roper said: "The outlook for the full year is positive and the group expects strong sales at Christmas thanks to new stock coming in from the US. The group continues to look for opportunities to acquire new sites at the rate of two every year and is actively redeveloping its existing portfolio of stores."

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