What does Wyevale's new strategy mean for other garden centres?

Garden centre groups and experts say Wyevale's £100m refinancing is important for the stability of the whole market, but they still hope to take customers from the 148-centre group.

Terra Firma-owned Wyevale announced a £122m loss in September on flat like-for-like turnover of £325m, but it has a new strategy with a new online offer, electronic point-of-sale, electronic resource planning systems, a distribution centre and a relatively new management team led by Roger Mclaughlan.

Klondyke chief executive David Yardley says: "It is important Wyevale is still there because there are a lot of garden centres in that group. It is still serving a need. I just think they have got the product offer wrong. I think there are too many concessions."

Wyevale has only 12 Christmas grottoes listed to open this season. Yardley says you have to look at associated spend and footfall brought in by Christmas attractions and not just the financials of grottoes themselves. "Grottoes shouldn't be seen as something you can make money out of, though you can if you do them well."

Klondyke chairman Bob Hewitt, who was at Wyevale from 1989 to 2005, says the industry does need a strong Wyevale because it is the biggest group. Squire's managing director Martin Breddy says service levels are more important to address now the finances look steadier. "There are Wyevales near us and we're managing to grow shopper numbers and one source is people who don't get very good service from Wyevale."

Taking customers

Dobbies chief executive Nicholas Marshall told the HTA Garden Futures conference that the company can grow sales through taking customers from other garden centres. "The way we're going to expand is to take other people's customers and I expect everyone in this room knows exactly who we're going to be taking them from," he said.

He said linking with Ocado for online sales cost Dobbies almost nothing compared to the "squillions" it was costing rivals.  But he said getting plants to customers online remained a slowly developing market and that click and collect was easier. Wyevale spent several years developing its online offer, finally launched this year. Sales have reached seven figures but have not always met targets. The company has placed online as central to its strategy.

Simon Quinton Smith, a director at property adviser Quinton Edwards, says suppliers are "relatively relaxed" about Wyevale. "We need them to get stronger and the fact they said they are doing no more acquisitions for a while is to focus on the core business and keep investing in existing assets. That's the way to get debt down."

Changes at Wyevale include new retail operations director David Anderson, who has promoted Chris Brannigan to director of garden centres and is replacing area managers with regional managers.

Suppliers seem happier after the refinancing from Hayfin placated credit insurers such as Euler Hermes, which has £30m of exposure to Wyevale.

Centres bought since Terra Firma took over in 2012 look to be losing some footfall and turnover, while smaller centres are doing better, partly thanks to a more gardening-focussed offer succeeding in good spring weather this year.

At Wyevale, footfall was about 46m a year in both 2015 and 2016, with conversion about 29%. Average transaction value was £19.39 in 2016, with gross margin 46.5% and garden centre labour cost to sales 14.9%. 

Concession income is now 78% of total EBITDA and good footfall is crucial to keeping hold of concession holders. Garden club membership is now at 3.4m. Employee numbers seem to be 6,266, though they are listed at 3,536 in 2015. Wyevale would not clarify whether this was an accounting mistake or not, however, Wyevale has begun a key time working/right people, right place, right time initiative to help deal with peaks and troughs in trading. 

Recommendations include a reduction in the number of 39-hour contracts, an increase in the number of 20-hour contracts and flexibility around working days/hours according to seasons. 

There is evidence that footfall is falling in Wyevale's top 20 centres with the share of the total dropping from 32 to 30 per cent over the past two years.

Terra Firma has previously explored a sale of Wyevale but is thought unlikely to attempt a repeat until it reports a significant improvement in its financial performance.

Wyevale has ruled out further purchases but has £50m for capital expenditure for the next five years. Accounts report a "significant shift in financial priorities away from acquisitions and other capital intensive growth initiatives".

The company would not comment on whether this statement means it will or will not be investing in centres. Some £88.4m was invested in property, plant and equipment in 2015/16 while £144m was generated through the disposal of property, plant and equipment in 2015/16.


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