Tesco explores sale of Dobbies Garden Centres

Kasmira Jefford
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Dobbies swung into the red last year after taking a big property write-down (Source: Dobbies)

Tesco is preparing to sweep its shelves clean of more non-core businesses – this time in the gardening section – as the supermarket chain focuses on reviving sales at its core supermarkets.

The retailer, which will publish its full-year results on Wednesday, already sold off a number of assets including its South Korean business Homeplus for £4.2bn last year, in a bid to bolster its balance sheet.

Now it is heading to the checkout again after hiring investment banking advisors at Greenhill to explore options for Dobbies Garden Centres, according to Sky News.

Family restaurant chain Giraffe is also understood to be on the block as well as Harris + Hoole, the coffee chain which Tesco recently took full ownership of. Euphorium Bakery is also likely to be closed while its vitamins business Nutricentre has already been wound down.

A spokesperson for Tesco said it "would not comment on rumour or speculation".

Read More: What Tesco assets are left at the checkout?

Dobbies is a Scottish-based chain of 35 garden centres bought during Sir Terry Leahy's leadership of the supermarket in 2007 for around £156m. The business posted a £48m loss last year after booking £54.4m of property write-downs. However, sales increased by eight per cent to £153m.

Giraffe, Harris + Hoole and Euphorium were all acquired by Tesco under chief executive Dave Lewis's predecessor Philip Clarke as part of a plan to drive footfall to its larger stores.

After selling its Korean business last year, Lewis said the review of its portfolio was complete and that he did not anticipate any major changes in the make-up of the group, although that did not exclude smaller disposals.

Talks to sell Dunnhumby, the marketing company behind Tesco's Clubcard, were also called off last year after failing to attract suitable offers.

Under Lewis, Tesco's perfomance has slowly improved, with the retailer expected to report profits of around £450m for the year to the end of March, compared to the record £6.4bn loss it posted in 2014.

Bernstein analysts are forecasting fourth quarter like-for-like sales growth of 0.3 per cent excluding fuel.

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