The Boots Co Plc is “a business in transition”, according to its
chairman, Mr John McGrath. The company reported a small increase in its half-year
sales, but a fall in pre-tax profits after reorganisations and its exit from
the Netherlands.
Announcing its results for the six months to September 30, Boots reported that
turnover increased by 1.3 per cent to £2.5bn. Pre-tax profits were down
by 8.2 per cent at £231m after £27m of reorganisation costs and
a £20m loss following the company’s sale of its 17 branches in the
Netherland to Etos on August 15.
Speaking to The Journal on November 3, Mr Ken Piggott (managing director, Boots
the Chemists Ltd) said that the transition at Boots the Chemists was a conscious
effort to get out of the non-core leisure market and increase the emphasis on
health and beauty. This had cost the company 2 per cent of its total sales already
and its 250 largest stores had been affected by having to change their merchandise.
However, the company had gained market share in toiletries as a result.
As part of a previously announced drive to reduce operating costs, there had
been a major reorganisation of the Boots the Chemists regional structure, halving
the number of regions, and the integration of some head office functions, such
as property acquisition, across the Boots group. This had led to redundancies
but had not affected the number of pharmacists employed by the company.
Boots reported losses of £8.3m associated with setting up its three internet
ventures: Handbag.com, Bootsphoto.com and the recently announced internet and
digital television service (PJ, October 20, p593).
At Handbag.com, 312,000 customers had made purchases amounting to £400,000
at a cost to Boots of £1.9m, or approximately £6 each. Commenting
on this, Mr Piggott said that the company had learnt a lot from Handbag.com.
It was a useful alternative channel for talking to customers and awareness of
the site was strong.
Commenting on the recent flooding, Mr Piggott said that the company’s Uckfield
and Lewes branches in East Sussex had been affected again by the most recent
flooding (PJ, October 20, p594).
Two branches in Wales had also been closed. In general, staff had made huge
efforts to get into work despite all the problems.