Boots could be about to close stores and cut jobs
The owner of Boots has warned UK stores face closures as the group looks to slash costs amid the “most difficult” quarter in its history.
US-based Walgreens Boots Alliance said it had started taking “decisive steps” in the UK to cut costs, including reviewing its near-2,500 Boots stores.
The group revealed it is looking at poor performing shops as well as “opportunities for consolidation”.
It follows the group’s announcement in February that 350 jobs are at risk in its Nottingham head office as part of plans to trim HQ staff costs by 20%.
It is also looking at ways to overhaul its pharmacy business.
The details come as owner Walgreens Boots Alliance reported a 2.3% drop in like-for-like UK retail sales in its second quarter to February 28, while comparable pharmacy sales dropped 1.5%.
Tough trading in the US also saw the wider group warn over full-year earnings, with boss Stefano Pessina branding it the “most difficult quarter we have had since the formation of Walgreens Boots Alliance”.
The group is now expecting underlying earnings per share growth to be roughly flat in the current financial year, a hefty downgrade on its previous guidance of 7% to 12% growth.
Global underlying net earnings slumped 14.3% to £1,919 million in the second quarter.
But sales rose 4.6% - or 6.7% with foreign exchange movements stripped out.
The international division including the UK saw second quarter earnings drop 8.9%, or 1.2% lower on a constant currency basis.
ITV News Business Editor Joel Hills says it is too soon to tell how bad it is for Boots, but they currently they face two pressures.
One from the Government cuts to funding for community pharmacies and another from more and more people shopping online.
When it comes to health and beauty, global data suggests Boots remains the most popular place in the UK but it’s losing share to the likes of Amazon and Aldi.
Boots said it doesn’t have a major programme envisaged but is reviewing under-performing stores.
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Mr Pessina admitted the group did not take action swiftly enough to offset challenging conditions.
But he outlined plans to turn around it fortunes, including ramping up global cost cutting targets by around another £383 million to more than £1.1 billion by 2022.
He also plans to make a number of senior hires to speed up efforts to boost its digital capability and transformation.
Mr Pessina said: “We are going to be more aggressive in our response to these rapidly shifting trends.
“We are focusing on our operational strengths and addressing weaknesses.”
Walgreens Boots Alliance was formed in 2014 after Walgreens bought the 55% stake in UK and Switzerland-based Alliance Boots that it did not already own.