Boots cemented its recovery in the run-up to Christmas, boosted by shoppers returning to its high street stores and continuing to spend more online.
In the first quarter (to 30 November) of its new financial year, Boots UK saw its like-for-like retail sales increase by 8.7% as store footfall continued to bounce back from the effects of the pandemic. In-store transactions rose 8%, with its city centre and travel stores benefitting from the return of office workers and tourism.
Meanwhile, the company’s investment in its online operation continued to pay off, with digital sales accounting for 18% of total retail revenue, double pre-pandemic levels. Boots noted that its App saw growth of 26% and now represents over a quarter of boots.com sales.
Boots also saw buoyant demand on Black Friday, with its online store recording its biggest-ever day of sales. Store sales were also up 13%, with its No7, electrical beauty and fragrance categories the top performers.
Comparable pharmacy sales decreased by 0.9% due to lower demand for its Covid-19 services compared to a year ago.
Meanwhile, the company revealed that it had a strong Christmas trading period, with retail sales growth of around 15% versus last December. Key categories, including gifting, beauty and fragrance were said to have performed “extremely well”, along with an uptick in OTC, cold and immunity lines, boosted by a resurgence of colds and flu this winter, alongside more cases of Covid-19.
Boots noted that its renewed focus on value and affordability had been a significant driver of growth. This includes its new own-label Everyday Essentials range – which saw sales increase by 35%; the Price Advantage promotion for members of its loyalty scheme; and its Price Lock pledge.
The group also continued to enhance its beauty offer, with more premium beauty and spa brands introduced within the quarter, and a further 19 new beauty halls opened, bringing the total to almost 150 across the UK.
“It has been another positive quarter for Boots,” said Sebastian James, Managing Director of Boots UK & ROI.
“Our focus on giving customers our best ever value to help with cost of living pressures, as well as continued investment in our digital capability and in updating our store estate has resulted in increased retail sales and market share growth for the seventh consecutive quarter.”
The retailer’s parent company, Walgreens Boots Alliance (WBA), reported a quarterly loss after taking a $6.5bn litigation charge. Walgreens, CVS and Walmart in November last year agreed to pay about $13.8bn to resolve thousands of US state and local lawsuits accusing the pharmacy chains of mishandling opioid pain drugs.
The group’s net loss in the first quarter was $3.7bn compared to a profit of $3.6bn a year ago. Sales fell 1.5% to $33.4bn (+1.1% on a constant currency basis). Excluding the negative impact from AllianceRx Walgreens of 485 basis points and the positive contributions from US Healthcare mergers and acquisitions of 280 basis points, sales growth was 3.2% on a constant currency basis.
WBA’s US Retail Pharmacy segment delivered a comparable sales increase of 3.8%, despite lapping strong comparable sales of 7.9% in the year-ago quarter that included a significant contribution from Covid-19 vaccinations.
“Walgreens Boots Alliance delivered a solid start to the fiscal year, as we continue to accelerate our transformation to a consumer-centric healthcare company,” said Chief Executive Officer Rosalind Brewer.
“We’re making significant progress in driving our US healthcare segment to scale and profit, including the recent VillageMD acquisition of Summit Health.”
Brewer said the company’s core retail pharmacy businesses in both the US and the UK remained “resilient” in “challenging” operating environments.
“Execution across segments reinforces our confidence in achieving full-year guidance, and our strategic actions are creating long-term shareholder value,” she stated.
NAM Implications:
- Boots now appear to be firing on all cylinders.
- Making it key that you ensure you secure your fair share of sales and investment…
- i.e a category-by-category comparison with your Boots business.
- Meanwhile, the $6.5bn litigation charge (Opioid) affecting WBA profits…
- …combined with this Boots resurgence…
- …may cause WBA to think about offering Boots for sale again?