Boots has confirmed that it plans to close 200 stores over the next 18 months, equal to just under 10% of the health & beauty chain’s standalone outlets.
The retailer’s US owner Walgreens Boots Alliance (WBA) has not yet confirmed specific stores earmarked for closure but stated they will be local pharmacy outlets where it has others within close proximity.
Boots UK’s Managing Director Sebastian James said: “We believe this is the right thing to do as it means that we can invest more in staffing those stores while not reducing our 90% coverage within a 10-minute drive of a Boots.”
The firm plans to redeploy the majority of affected staff to neighbouring stores.
Boots currently trades from 2,485 sites, comprising around 500 large retail stores and the rest smaller local pharmacies. It said the impact on revenue from the closures would be about 1%.
Last week, Boots opened the doors to a new format store in London’s Covent Garden that is part of its wider plans to re-invigorate its offer to lift sales and win back shoppers from emerging rivals in the health & beauty sector.
The performance of the Boots chain has been lacklustre of late, with its sales weakening as a result of the tough trading conditions, underinvestment in its stores, and increased competition from value-oriented chains and online beauty retailers.
WBA’s quarterly results last week highlighted Boots’ current woes. Like-for-like pharmacy sales in the UK business slipped 0.8%, whilst retail sales fell 2.6% in a tough market. However, the group did state that Boots was “broadly gaining retail market share amid weakness in certain categories”.
James warned of further tough times ahead with waning consumer confidence and political uncertainty pushing the UK towards a possible recession. “It’s quite tough out there. There are some storm clouds gathering…We need to be ready,” he said.
NAM Implications:
- Eliminating 200 stores will hopefully eliminate ‘overlap’…
- …allowing more productivity per remaining stores…
- (assuming 100% transfer of custom to nearby branches).
- More importantly will be WBA’s willingness to allow investment in Boots new format store…
- …and its roll-out to full potential.
- NAMs could benefit from assuming the latter and proposing accordingly…
