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Garden Centre Group to use concessions for growth

Guy Hands, Chairman of Terra Firma, the investment company that recently purchased The Garden Centre Group has recently written to investors outlining his plans for the group. Integral to the development of the estate is to complement its core horticulture ranges with a Concession income stream which will form the foundations to the group’s financial structure.

Identifying that Concessions can provide garden centres with guaranteed regular income, in addition to giving customers a reason to visit, whatever the weather, Terra Firma have stated that they are looking to develop their Concession portfolio as part of the investment into the estate.

Echoing CEO Nicholas Marshall’s recent statement to see The Garden Centre Group grow with “a third horticulture, a third catering and a third concessions” the UK’s largest garden centre group have incorporated Concessions into their business model proving they are an essential element to the modern day garden centre.

Hands also eludes to further acquisitions for the 129 strong chain which may result in new space being identified for complementary retailers.

The following extract is taken from a letter to investors, written by Guy Hands and featured on the Terra Firma website:

“Since the beginning of the year we have made a significant acquisition in the UK: The Garden Centre Group ‘TGCG’. Terra Firma sourced this deal from one of the UK banks, where the business was brought into administration after suffering financing difficulties in the aftermath of the credit crunch. This deal – in a sector with growing demand, having been under-invested by its prior owners, and negotiable down to the right price – is exactly the sort of opportunity that I believe is going to become increasingly common in Europe in the coming years.

We announced TFCP III’s acquisition of TGCG in March, for a total consideration of €331 million (£276 million). The transaction was completed after the quarter end, on 24 April.

TGCG is the UK’s largest specialist retailer of plants and garden care products and is a classic Terra Firma deal. It has the leading position in a £5 billion per annum market that is very fragmented and has good long-term growth prospects. Gardening is part of the British culture and appeals particularly to an older demographic. Because this demographic views garden centres as a good value, healthy leisure activity, spending at garden centres is considerably less volatile than UK consumer spending overall. Additionally, the asset-backed nature of TGCG, with its ownership of the freeholds for 70 of its 129 garden centres, places it firmly within the remit of Terra Firma’s investment strategy.

We intend to sharpen TGCG’s focus in its core garden business while growing a steady concession-based income stream, as we have done with Tank & Rast. We will also grow the estate through acquisitions.

Alongside the acquisition of TGCG, we are continuing to engage in a number of discussions concerning possible acquisitions where Terra Firma’s expertise can add real value. In addition to seeking highly operational, strategic transformation deals like TGCG, we see important opportunities in the renewable energy sector.”

Source : Promotional Space
http://promotionalspace.com/news/terra-firma-to-grow-the-garden-centre-group-with-concessions/

13 June 2012
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Thank you for the excellent presentation that you gave at Woodbury Park on Thursday morning. It was very interesting and thought-provoking for our Retail members. The feedback has been excellent.

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Martin Elliott. Chief Executive - Home Hardware.
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