Jasper Jolly and Amy Walker 

Boots profits plunge as high-street slump hits chemist chain

Retailer reports 18.3% fall and warns it could close stores as part of cost-cutting drive
  
  

A Boots store
Boots is one of many high-street retailers struggling with increased online competition. Photograph: Oli Scarff/Getty Images

Profits from Boots’ UK stores slumped by almost a fifth last year as sales fell at Britain’s largest chain of chemists.

Boots UK, which is owned by the US company Walgreens Boots Alliance, reported profits of £317m in 2018, a fall of 18.3% compared with 2017, according to its latest accounts.

Revenues fell by 2.3% to £6.8bn as the company struggled, alongside other high street chains, with increased competition online. The number of active users of Boots’ Advantage Card loyalty scheme also fell, from 14.6 million to 14.4 million.

The weaker results for the UK arm come amid struggles for the parent company, which warned it expected “significant restructuring” – including the possibility of British store closures – as part of a drive to save more than $1.5bn (£1.2bn) in annual costs by the 2022 financial year.

Boots UK, which traces its roots to John Boot’s first Nottingham store in 1849, resisted major cuts to its 2,485 shops in 2018. Boots employs about 56,000 people in the UK, according to its website.

However, it said in February it would cut up to 350 jobs at its Nottingham head office, in response to changes in the market.

Walgreens said last month that the company’s struggles had continued beyond the year covered by the Boots UK results.

Stefano Pessina, the Walgreens Boots Alliance chief executive, last month described the three months ending in February as “the most difficult quarter we have had since the formation of Walgreens Boots Alliance”, blaming a difficult market as well as macroeconomic trends. The US arm has been particularly hit by pressure to cut prescription drug prices as well as cheaper generic drugs.

Pessina led the buyout of Boots by the US private equity firm Kohlberg Kravis Roberts in 2007, before merging the company with the US drugstore Walgreens in 2012.

In April he pledged to be “more aggressive” in tackling the problems faced by the chain, after the company slashed its profits forecasts for 2019.

 

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