Dobbies Garden Centres, one of Britain's largest garden centre operators, is preparing for a significant financial restructuring that could lead to store closures and substantial rent reductions.

The company, which is owned by American investment firm Ares Management, is reportedly working with advisers from FTI Consulting on a restructuring plan.

The move comes as Dobbies grapples with widening losses, which reached £130 million in its latest annual results, a stark increase from the £21.3 million loss reported the previous year. The retailer has attributed these disappointing figures to unseasonable weather and high inflation.

With 77 stores across the UK and a workforce of 3,700, Dobbies faces uncertain times. While the exact number of potential store closures and job impacts remains unclear, sources suggest that if creditors do not approve the proposed restructuring plan, an insolvency process may be on the horizon.

The restructuring plan, a contentious mechanism that allows the company to impose financial cuts on its creditors, is being considered just 18 months after Ares Management took control of Dobbies through a separate debt reorganisation. Previously, the garden centre chain was owned by Midlothian Capital Partners and spent nearly a decade under the ownership of Tesco, Britain's largest retailer.

Industry experts note that retailers often use such court processes to address underperforming stores and negotiate rent reductions with landlords. A city source, speaking on condition of anonymity, told Sky News, "The preparation of a restructuring plan at this stage signals the seriousness of Dobbies' financial situation. It's a tool that can be effective in reshaping a business, but it often comes with difficult decisions."

Founded by James Dobbie in 1865, Dobbies has a long history in the British retail landscape. The current financial overhaul represents a significant moment in the company's journey, as it seeks to adapt to challenging market conditions and changing consumer behaviours.

The news of Dobbies' restructuring plans comes amidst a broader trend of high street retailers facing financial pressures. With the rise of online shopping and economic uncertainties, many traditional brick-and-mortar stores are being forced to reconsider their business models.

As of now, Dobbies has not responded to requests for comment on the restructuring plans. Ares Management has also been contacted for comment, while FTI Consulting has declined to provide any statement on the matter.

The outcome of this financial overhaul will be closely watched by industry observers, as it could set a precedent for other retailers facing similar challenges in the current economic climate.

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