Despite a 7.7% sales increase in its latest year-end results, Dobbbies has slumped £48m into the red after writing down the value of its property portfolio.
Sales for the 53 weeks ended March 1, 2015 were up nearly 8% to £153m. However, the Scottish garden centre chain moved to a big loss from a pre-tax profit of £6.6m in the previous year, after booking £54.4m in impairments on assets, including its centres following an assessment of its property portfolio. Excluding the additional impairments, profits were down 9% to £6m.

Dobbies is the latest division of the Tesco business to report losses, following restaurant chain Giraffe and coffee shop Harris + Hoole, which have also recently revealed they are in the red.

Analysts have suggested that several of Tesco's smaller divisions, including Dobbies, should be sold off as Tesco tries to turn around its fortunes.

A Dobbies' representative said of the results: "We are pleased with our full year trading performance in 2014/15. This demonstrates that our strategy of putting plants and gardening first is working. As well as delivering positive like for like sales growth, our profit and cash generation were also well ahead of expectations and significantly ahead of the previous year. The underlying business again performed well with sales growing by 7.7% to £152.9m and gross profit growing by 9.3% to £77.0m.

"The loss is due to an impairment charge of £54.4m on intangible and tangible assets. The issue of goodwill impairment relates to the acquisition of Dobbies in 2008. In common with the wider retail industry and standard accounting practice, we assess the value of our property portfolio on an annual basis. As a consequence, we have written down the value of our property assets accordingly."

The spokesperson added: "Our strategy remains focused on our core categories of plants and gardening which we are confident will fuel our growth in the future."