Boots announces surprise pick-up in sales

Health and beauty chain Boots continued its recovery today by unveiling a surprise pick-up in sales for the last three months.

Boots, which is due to merge with Alliance UniChem later in the year, bettered market expectations by announcing like-for-like sales growth of 2.2%.

In Ireland, total sales for the full year are estimated to be up 10.3%, and sales in Q4 are ahead of target. This compares with an overall group sales increase of 1.6% for the full year and 3.3% for Q4.

Ireland continues to be among the best-performing areas within the Boots group. Director of Boots Ireland Rhys Iley said the Irish stores had traded ahead of expectations and had performed particularly well in the health and beauty categories.

“Our sales of health products were up 8.5% for the year, and 10.5% for the most recent quarter. One of the key drivers for the quarter was the successful Boots Change One Thing New Year campaign. Sales of beauty products also performed well and were up 12.8% for the full year and 7.4% for the quarter, with the re-launch of No7 playing a major role,” he said.

Boots has 40 stores in Ireland and plans to open a further 10 new outlets in the next few years. The company employs 1,200 in Ireland and says it contributes more than €165m to the Irish economy through the sourcing of goods and services for its Irish and UK businesses.

The most recent accounts filed for Boots Retail Ireland Ltd record a turnover of €193m and pre-tax profits of €16m for the year ended 31 March 2005.

The quarterly update on trading came as Boots said it would carry out one of its largest-ever programmes of price cuts, involving reductions on about 1,000 products in departments including health, beauty and food.

Boots said the cuts - involving an average price reduction of 8% - came on top of the £200m (€288m) already invested in prices over the past three years.

The Nottingham-based company has faced a fierce battle with supermarkets in the health and pharmacy sector.

But figures today offered signs of progress as the previous update from Boots had revealed a drop in like-for-like sales of 0.7%. In the year to the end of March, sales were 0.2% lower, Boots said today.

Much of the improvement was due to gains in cosmetics and fragrances, where total sales grew by 10.4%. Dispensing business improved by 6.5% and over-the-counter healthcare sales grew by 4.5%, but Boots said some of the gains had been offset by a combined 9.3% drop in electricals and the company’s January sale.

Chief executive Richard Baker said the business had performed “solidly” but added there was no room for complacency.

He said: “We believe that the consumer environment is set to remain challenging and that there will be continuing inflationary pressure on retail costs.”

Recent changes at Boots have included investment in its stores, particularly the beauty halls, while efforts have been made to speed up the supply chain.

Mr Baker added: “This has been a year of enormous change, and it is pleasing that the core business has remained focused and made good progress.”