Boots ended its financial year with a 6.2% rise in retail like-for-like sales as improvements to its product offering and price competitiveness continued to pay off. However, its parent company, Walgreens Boots Alliance (WBA), continued to struggle and confirmed it will shut over 1,000 stores in the US as part of a turnaround plan.
In the UK, Boots noted that its store performance was boosted by sales growth in destination health & beauty, convenience and flagship stores, while its airport stores also saw good growth.
Despite a disappointing summer, Boots’ own-label suncare range Soltan saw sales climb 20% over the 13-week period to 31 August. The chain’s revamped Beauty offer also had another strong quarter, with sales up over 6%, bolstered by the addition of several new, on-trend brands to its range.
Boots saw its digital sales jump 18.7% despite tough comparatives with a strong performance in the same quarter last year. The retailer noted that its app is becoming increasingly popular, with its 7.5 million active users generating 40% of total digital sales.
Boots also highlighted that its Price Advantage promotion remained popular, contributing to a 4.5% increase in sign-ups to its loyalty scheme, which now has 16.7 million active members.
Meanwhile, increased demand for both NHS and private healthcare services drove sales in its pharmacy business up 10%. Boots revealed that its NHS Pharmacy First Service in England continued to perform well, with over 150,000 consultations in the quarter.
Seb James, the retailer’s UK & Ireland Managing Director, who is leaving the business next month, said: “I’m delighted to close the year with such a strong set of results. We have delivered a fourteenth consecutive quarter of market share growth and are seeing positive momentum across the whole business, with healthcare now performing strongly alongside our innovative beauty business.
“We’re laser-focused on preparations for our peak trading period, with our Christmas gifting range landing in stores and Black Friday just around the corner.”
Last month, Boots named Anthony Hemmerdinger as its new Managing Director. He is currently the chain’s Retail & Operations Director, a position he has held since September 2022. He was previously Chief Operating Officer at Asda, where he spent six years.
James concluded: “As I prepare to hand the leadership baton over to Anthony, I am confident that I am leaving the business in a very solid position, well set up to continue delivering on its exciting transformation.”
Meanwhile, WBA announced yesterday that it would shut 1,200 of its Walgreens stores in the US over the next three years as group CEO Tim Wentworth plots a turnaround of the struggling pharmacy chain that has been hit by sluggish consumer spending and low drug reimbursement rates.
The closures were flagged in June, but the company had not disclosed the number of affected stores at that time. It currently has around 8,000 stores in the US. It plans to initially close 500 stores in 2025 and focus on locations that are cash-flow negative, as well as underperforming stores where lease expirations are due in the next few years.
The confirmation came after WBA narrowly beat Wall Street’s lowered estimates for fourth-quarter adjusted profit and forecast fiscal-year earnings that were mostly in line with expectations.
The group’s adjusted operating income slid 37.7% to $424m, reflecting softer US retail and pharmacy performance, lapping the reversal of incentive accruals and prior year sale-leaseback gains, partly offset by cost savings initiatives and improved profitability in the company’s Healthcare division.
Sales increased 6.0% to $37.5bn after the group achieved growth in both its domestic and international operations.
Wentworth has unveiled a series of changes since taking on the top job last year, including the removal of multiple mid-level executives and a $1bn cost-cutting programme. “Fiscal 2025 will be an important rebasing year as we advance our strategy to drive value creation. This turnaround will take time, but we are confident it will yield significant financial and consumer benefits over the long term,” he said in a statement yesterday.
NAM Implications:
- Boots are hitting all the right turnaround notes…
- (But its fate will be determined by Walgreens’ fortunes)
- Meanwhile, key that UK suppliers ensure they secure and maintain their fair share of Boots’ sales and investment.
- Longer term, much depends on WBA turning around the US operation…
- …and deep (15%) store-cuts of its 8,000-strong estate is just a start.
- i.e. any delay in securing improved performance has to cause WBA to compromise on a possible selling price for Boots.
- Watch this space…