Boots fail to match first quarter

Health and beauty chain Boots forecast mixed second-quarter sales today but insisted it was still on track to hit full-year profit expectations.

Nottingham-based Boots said that while the first quarter had been strong, the second had fared less well.

While health and beauty sales were on the up, baby and photographic goods had seen ‘‘weak’’ trading.

A spokesman said photography was suffering from a ‘‘depressed’’ market, while the baby division had been hit by increased competition from supermarkets.

But he added: ‘‘Margins remain good. We are seeing a lot of activity with the supermarkets but we are not going down that slash-and-burn route so we are confident about profitability.’’

The group said that overall like-for-like sales for the first half would show a small increase, which the spokesman said was in line with market expectations.

It added: ‘‘The profit outlook for the year to March 2002 remains in line with management expectations at the start of the year.’’

Earlier this year Boots was hit by the abolition of resale price maintenance (RPM), which allowed branded drugs manufacturers to set prices.

Its abolition in May cleared the way for supermarkets and other rivals to sell cut-price medicines, and at the time Boots said the new regime would knock around £15 million off its profits for the next two years.

The spokesman said that since the removal of RPM, the market had been flooded with stock as retailers launched a series of price promotions.

But he added that Boots’ sales were expect to lift in the second half of the year as the ‘‘cold and flu season’’ kicked in.

Last week, Boots announced that it would take a £10 million hit after closing its online photo storage service. The group said demand had been ‘‘substantially lower than forecast’’.

Boots’ half-year results are due out at the beginning of November.

Shares in the retailer slipped 9½p to 599p in early trading.