Boots UK sales ‘won’t fully recover’ until 2023, parent company says
Despite earlier projections stating Boots UK would “broadly get back to the pre-COVID-19 levels” in 2022, its parent company has said that the multiple’s sales will not bounce back until fiscal year 2023.
Boots UK had a “fabulous quarter” between December and February, despite a “big spike in Omicron” cases, Walgreens Boots Alliance – Boots’ parent company – chief financial officer James Kehoe told investors during the company’s latest financial results conference call yesterday (March 31).
But while Boots’ parent had previously predicted that the multiple’s sales and profitability would return to normal as it “exit[ed] 2022”, Mr Kehoe said yesterday that Boots UK’s sales would not “fully recover until fiscal year 2023”.
“There’s a lot of good growth ahead in the UK,” he added.
Read more: Walgreens Boots Alliance prioritises 'turnaround' of Boots UK
Pharmacy sales continue to improve
Boots UK’s overall sales advanced 15.2% compared with the same quarter last year, Walgreens Boots Alliance wrote in a financial report released ahead of the call.
Pharmacy sales saw a 3.6% increase in the same period. Comparatively, Boots recorded an 8.8% and 11.4% increase in pharmacy sales in the last two quarters respectively.
Meanwhile, adjusted gross profit for the whole international segment – which includes the UK and Germany – “increased 15.2% on a constant currency basis, reflecting strong UK growth, notably from higher retail store transactions”, Walgreens Boots Alliance added.
Online sales bolstered Boots throughout pandemic
Remarking on the steady growth of Boots’ online sales – which rose 60% in two years – Mr Kehoe said Boots was “one of the businesses that used COVID-19 as a time to reinvent itself”.
“More than 15% of total UK retail sales comes from [Boots’] digital channel, up from around 9% pre-COVID, with an increasing proportion of sales originating from our mobile app,” he explained.
“I don’t think there’s many retailers in the UK that have [an online] business that represents 15% of sales,” he added.
Walgreens Boots Alliance was “very happy” with Boots’ “large and fast-growing dot-com business”, Mr Kehoe said.
He did however also note that boots.com sales had declined in the three months to February as footfall “to physical stores increased [by] 52%”. The multiple’s digital business, however, still “remains in a very strong position”.
Boots UK CEO Sebastian James also made note of Boots’ digital sales in a statement released before the Walgreens Boos Alliance conference call.
The multiple’s “increasingly powerful online presence”, he said, as well as its “broad and rejuvenated store portfolio” means it is “uniquely positioned to capture further growth”.
Read more: Transforming Boots branches: ‘We just can’t do what we’ve always done’
In internal emails seen by C+D in January, Mr James told staff that it was “realistic to think” that Boots UK could become “an independent company again”, after news circulated last year that Walgreens Boots Alliance was “exploring” the sale of its UK pharmacies.
Boots strategic review “progressing well”
Walgreens Boots Alliance CEO Roz Brewer mentioned the company had “initiated a review of the Boots business” during the December to February period.
This was done “to advance [its] strategic priorities and to ensure [its] asset portfolio is strongly aligned”.
The strategic review of Boots is “progressing well”, Ms Brewer said.
C+D reported in January, when the review was announced, that it would primarily focus on its “successful” Boots business and the No7 Beauty brand.
Read more: Boots UK sale: speculation and potential market impact – where are we now?
