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Boots UK parent company ‘open to opportunities' after sale called off

Boots’ parent company Walgreens Boots Alliance will continue to “stay open to all opportunities to maximise shareholder value”, it has revealed days after calling off the sale of the UK pharmacy chain. 

The decision to abandon plans to sell Boots UK and the No7 Beauty brand followed a “rapidly evolving and challenging financial market conditions beyond our control”, chief executive officer Rosalind Brewer told investors during the company’s latest financial results conference call yesterday (June 30).

Earlier this week, the company announced it had completed its “strategic review” into its UK business, and that no prospective buyers were able to make an offer “that adequately reflects [their] high potential value”.


Read more: Boots UK: Parent company decides against selling pharmacy chain


While Walgreens Boots Alliance could not have predicted the “dramatic change” in the market, “it is an exciting time for Boots and No7, which are uniquely positioned to continue to capture future opportunities presented by the growing healthcare and beauty market”, Ms Brewer added.

The board “remains confident that they hold strong fundamental value”, she said “and longer term, we will stay open to all opportunities to maximise shareholder value for these businesses and across our company”.


“We had eight to 10 interested parties”


The strategic review “gained early high interest at the very beginning” of discussions in January, Ms Brewer revealed, with “eight to 10 parties” interested in the Boots business.

The company held “very productive discussions” with interested parties but began due diligence checks “just as the market began to turn on us” in “such an unexpected and dramatic change”.

As a result, “we made the decision to slow this opportunity down”, Ms Brewer said.


Read more: Could the Boots UK sale fall through?


The Boots UK business “is healthy”, she added “and we’ll continue to ensure that it remains healthy”, she stressed.

“Our thinking is, in any of these situations, the business should be good enough for us to retain as well as to look at strategic opportunities,” she added. Walgreens Boots Alliance will continue to invest in the businesses, it pledged earlier this week.


Drop in pharmacy sales


Presenting Boots UK’s financial results, chief financial officer James Kehoe revealed that the multiple had had “a strong quarter”, which was “led by strong retail performance”.

Boots UK’s overall sales advanced 13.5% compared with the same quarter last year, Walgreens Boots Alliance wrote in its financial report, released ahead of the call.

The multiple's comparable retail sales increased 24% compared with the same quarter last year, with market share gains across all categories, led by beauty, it added.


Read more: Boots UK sales ‘won’t fully recover’ until 2023, parent company says


However, pharmacy sales saw a 0.4% decrease in the same period. Mr Kehoe attributed this decrease to “timings of NHS reimbursement”, compared to the same quarter last year.

Comparatively, Boots recorded a 3.6% and 8.8% increase in pharmacy sales in the previous two quarters respectively.

Meanwhile, adjusted gross profit for the whole international segment – which includes the UK and Germany – “increased 11.3% on a constant currency basis, reflecting strong sales growth in the UK”, Walgreens Boots Alliance added.


Digital offering accounts for 13% of sales


Despite the strong performance, “store footfall in the quarter remains around 20% below pre-COVID levels”, Mr Kehoe told investors.

While Boots’ “travel locations are now improving”, he added, they “remain quite subdued”.


Read more: Boots launches online mental health services following demand from patients


However, sales via the website HAVE “more than doubled compared to pre-COVID levels”, he said. Boots’ digital channels accounted for over 13% of total UK retail sales in the quarter, compared to 6% pre-pandemic.


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