Boots Healthcare International up for sale

Boots put its business making Nurofen and Strepsils up for sale today as part of the latest attempts at restructuring the health and beauty chain.

The planned disposal of Boots Healthcare International was announced as the company confirmed disappointing high street sales for the first three months of the year and warned tough trading conditions would continue to hit profits.

Adding detail to a profits warning issued last month, Boots said like-for-like sales in the final quarter of the year fell 0.9% on a year earlier.

It stuck by revised forecasts for Boots the Chemists’ profits of £470m (E685m) in the recently-completed financial year, but warned figures were likely to be lower this year in the wake of lower consumer spending and higher costs.

Chief executive Richard Baker said: “It is clear that we are now, and will be for the foreseeable future, operating in a much more difficult trading environment in which sales growth will be hard fought for and cost pressures will continue to rise.”

The company said it believed the time was right to sell Boots Healthcare International, which exports products such as Clearasil worldwide and has seen profits grow to more than £80m (E117m) from £50m (E73m) four years ago.

Boots said the over-the-counter medicines market was consolidating and that its future was better placed outside the group. The sale process is expected to be complete by the end of the financial year with shareholders likely to get a significant proportion of the proceeds.

Among other changes announced today, Boots said it would put 300 of its smaller stores on the market. The company, which has 1,400 sites, will continue to run the stores but should pocket proceeds of around £250m (E364m).

Mr Baker said the company will continue with a restructuring aimed at winning back market share from supermarket rivals, including Tesco and Asda. Changes to pricing structures and opening hours have been introduced, but Boots has yet to complete an overhaul of its supply chain and computer systems.

He added: “It has been tough for both our people and our shareholders to face the reality that BTC was operating an unsustainable model. Re-investment was minimal and profits were inflated by unrealistic pricing. We are now tackling these issues.”