Trading Statement January 2018
TRADING STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2017
Dear Shareholder
I am pleased to provide you with an update on Blue Diamond Ltd's trading for the year ended 31 December 2017 in advance of the final results that we expect to announce at the beginning of May 2018.
The Group has traded well again and delivered good growth in 2017, although the sales increase over the full year has been lower than in previous years and the first half of 2017.
Total sales rose by 6% with like for like sales growth, excluding Harlow and Coton Orchard, of 3%. Total sales in the UK increased by 7% with like for like sales growth of 4%. Total and like for like sales increased by 2% in the Channel Islands.
After a very strong first half of 2017, the second half of the year was more challenging. Sales were flat and customer numbers declined in the second half as the Group experienced the consumer slowdown reported by the likes of the British Retail Consortium, the ONS and many other retailers.
Nonetheless, during the year the Group outperformed the benchmark provided by the industry trade body the Garden CentreAssociation, both overall and in every key category except Christmas. We did not experience the significant trading problems evident in our major competitors. Average spend increased and margins were higher than 2016 across the year. Our gearing fell below 20% by the end of 2017.
We continued to improve our existing estate, with the redevelopments of St. Peters and Coton Orchard complete, as well as the first phase of Grosvenor. All these sites have seen good growth in 2017.
The redevelopments of Fermoys and Newbridge are now scheduled to start in the second half of 2018. We are progressing the planning applications for the redevelopments of Harlow and Fryers.
The fit-out of Bridgford started in November 2017 and we are on track to open in late March 2018. We are very excited about this new centre, which is targeted to deliver £10m of sales upon maturity and to be recognised as the finest, most innovative garden centre in the UK.
Chairman Simon Burke commented, "The second half of the year reflected tougher general conditions in the retail market, but we are pleased to report a good improvement in the performance for the year overall. The UK economy is decelerating as a result of Brexit uncertainty and real wages are falling, which are both having an adverse effect on the consumer and therefore the retail sector. Whilst we are well positioned to manage this, we are not immune and we are now expecting more modest underlying profit growth for the next couple of years. Nevertheless, we are continuing to progress our pipeline of new build opportunities and the progressive redevelopment of our existing portfolio, which should deliver strong returns in the medium to long term."
Yours faithfully,
Richard Hemans
Group Finance Director and Company Secretary