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Garden centre chain Dobbies posted an 11.7 per cent decline in 2007 pre-tax profit to £3.8 million after a £3.1 million charge related to a takeover battle last year.

Several parties were interested in Dobbies, which is seen as a rapidly-growing company, but Britain's biggest grocery retailer Tesco eventually won and is now the majority shareholder, with a 65 per cent stake.

Dobbies has been expanding this year and has opened new centres in Dunfermline, Chesterfield and Southport.

Like-for-like sales only grew by 1.4 per cent after a wet summer, although new space gave an overall upturn in sales of more than 20 per cent.

Dobbies is showing caution about the year ahead. Chairman Lucy Neville-Rolfe said: "It's no secret that at a time when many households are feeling the pinch from rising energy bills, fuel charges and high interest rates, retailers will have to compete harder than ever to succeed.

“The garden centre sector is no exception, and we remain cautious with regard to consumer economics in 2008."

The company said the weather had hurt sales of outdoor furniture and garden plants, but there was a 22 per cent increase for fruit and vegetables as a 'grow your own' trend took off.

Indoor living and restaurant sales remained strong, however.

The company told shareholders it would not be issuing a dividend this year and would be investing in expansion instead.