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Tesco understood to be selling Dobbies Garden Centres

Dobbies Peterborough 725 x 500

Tesco has hired Greenhill to sell its garden centres unit as other non-core assets head for the checkout, Sky News learns.

The chief executive of Tesco is drawing up plans for a clearout of loss-making businesses, including Dobbies Garden Centres, as he focuses on reviving the core operations of Britain's biggest retailer.

Sky News has learnt that Dave Lewis has approved the appointment of Greenhill, a long-standing investment banking adviser to Tesco, to work on the sale of Dobbies.

The move comes as part of a decision by Mr Lewis and senior colleagues to sell a string of under-performing or non-core businesses bought during an ill-fated acquisition spree over the last decade.

Sources said on Monday that Tesco also planned to sell Harris & Hoole, a chain of coffee shops it recently took full ownership of under an existing agreement with its other shareholders.

Euphorium, a bakery business, is likely to be closed, while Sky News revealed last month that Giraffe, its family restaurant chain, was also on the block.

Executives also decided to close Nutricentre, a healthy living business, two weeks ago.

The non-core businesses represent a tiny proportion of Tesco's revenues, and Mr Lewis is unlikely to announce his plans for them when the company unveils its full-year results on Wednesday, according to insiders.

Dobbies was bought by Tesco in 2008, when the company was run by Sir Terry Leahy, the architect of its dominance of the UK grocery retail sector.

It now has 35 garden centres across the UK, many of which are attached to Tesco stores, but recorded a £48m loss in its 2014-15 financial year after writing down the value of its real estate.

A Tesco spokesman said the company did not comment on "rumour and speculation".

Many of the smaller businesses were bought by Philip Clarke, Mr Lewis's immediate predecessor, who wanted to diversify the retailer's appeal to customers and find ways of utilising excess space in its stores.

Mr Lewis now wants to offload businesses and brands which either dilute Tesco's margins or act as a distraction from its principal revival mission.

Mr Clarke's tenure ended in 2014 when he was sacked after a string of profit warnings.

Shortly after Mr Lewis arrived, Tesco was forced to restate its profits, sending its shares tumbling and sparking a criminal probe by the Serious Fraud Office that has yet to conclude.

He has since sold its business in South Korea for £4bn, but called off an auction of Dunnhumby, its data analytics business, after it failed to attract sufficiently attractive offers.

Tesco has begun to see a modest turnaround in its performance amid continuing competition with discounters Aldi and Lidl, and its more traditional rivals J Sainsbury, Wm Morrison and the struggling Asda.

City analysts expect Tesco to report roughly £450m in profit for last year, compared to its record £6.4bn loss in 2014.

It may also announce its first quarterly rise in like-for-like sales for more than three years.

Source : Mark Kleinman - Sky News

11 April 2016

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