Boots considers property sales - report

Health and beauty retailer Boots was today said to be planning to raise around £300m (€431.4m) from the sale and leaseback of some of its 1,400 stores.

The Financial Times said the move would provide chief executive Richard Baker with the capital needed to see through a three-year turnaround programme.

Around a third of the group’s stores are thought to be freehold, although today’s report said Boots was unlikely to sell the entire portfolio. A spokesman for the company, wich is based in Nottingham, England, declined to comment on the speculation.

It comes a week after Boots hailed the success of its strategy following a 2.6% rise in like-for-like sales over the Christmas period.

Boots put its turnaround programme on hold for the festive season, but warned investors much still needed to be done to improve its performance, including changes to its supply chain and computer systems.

The FT said the retailer was investing £390m (€560.7m) in the current financial year with £250m (€359.4m) going on capital investment and a further £140m (€201.3m) being ploughed into price cuts and 60 new store openings. It has already extended ranges, invested in larger stores and stretched opening hours.

Proceeds from a property deal may also help fund a two-year £700m (€1bn) share buy-back programme previously announced by the company.

The report warned a sale and leaseback could put pressure on the company’s credit rating as bondholders often viewed property ownership as a sign of financial strength. Standard and Poor’s currently has Boots at A-minus.