Sebastian James, the Chief Executive of Boots, is set to step down after six years in the role. His departure follows last week’s news that the retailer’s parent company, Walgreens Boots Alliance (WBA), has put a planned sale or IPO of its British unit on hold for the foreseeable future.
James will leave Boots in November to become the new CEO of Veonet, which operates one of Europe’s largest chains of ophthalmology clinics.
Shares in WBA plummeted as much as 25% last Thursday after the group slashed its profit outlook and announced plans to close more stores in the US as a result of weaker consumer demand and lower reimbursements for pharmaceuticals.
However, Boots continued its strong run during the third-quarter period as it benefitted from the overhaul of its product offering and store estate, alongside moves to improve its price competitiveness.
After a failed attempt to sell Boots in 2022, speculation over its future ownership resurfaced in January when group CEO Tim Wentworth said it was “evaluating all strategic options to drive sustainable long-term shareholder value” for the group.
Speaking last week, Wentworth said: “Our review of Boots UK showed that we have attractive options to unlock value in this business. While we believe there is significant interest in Boots at the right time, its growth, strategic strength and cash flow remain key contributors to the company,
“We are committed to continuing to invest in Boots UK and find innovative ways for this business to fulfil its potential.”
James claimed his exit from the retailer is not related to WBA’s decision to shelve plans for a sale of the UK business.
He told The Times that “any leader of business loves doing disruptive things and floating the business, or indeed selling the business, would have been a great, fun thing to do”.
But he insisted he was not leaving the cosmetics chain due to the u-turn, claiming conversations between Veonet had begun “months and months ago, long before any call was made” on the IPO or sale.
James claimed he was “as far from disgruntled as it’s possible to be” by the decision. “I’m absolutely gruntled. This is good for Boots and I think it’s good for me because I get to do my thing,” he said.
When James joined Boots, he outlined a vision to regenerate the company’s physical stores, its online presence, and to reclaim its status as the place to go for wellness, beauty and pharmacy products.
Latest accounts filed at Companies House confirm that the performance of Boots UK continued to improve last year, with its pre-tax profit increasing from £4m to £60m on revenue up 8.3% to £7.05bn. In Boots’ core retail division, revenue climbed 12.2% to £4.72bn, with comparable growth of 12.5%. The company noted that it benefitted from improved footfall in its stores, increased online capacity, and strong performance of its revamped beauty ranges.
NAM Implications:
- Sebastian James will be a loss to Boots at this stage.
- Calling off an IPO is understandable, given that it usually requires five years of good results to optimise an IPO opportunity.
- Given current pressures on the WBA share price, the company needs a quicker solution.
- i.e. sale of Boots, ideally to a cash buyer, given high interest rates affecting possible private equity initiatives.
- All of which points to a major opportunity for Amazon…
- …in terms of optimising all of their potential strengths applied to healthcare provision, i.e. diagnosis, treatment fulfilment and aftercare.
- £7bn would be a tough negotiation on principle, but should not be an obstacle…
