A reduction in the number of Rowlands branches, “efficiency savings, and unrealised vacancies from increased attrition in the year” contributed to the dwindling workforce, according to the multiple’s financial report – which was submitted to Companies House yesterday (October 6).

“In a large retail network, staff costs are a key expense,” the report added.

The average number of Rowlands employees fell from 3,911 in 2021 to 3,357 in January this year, representing a 14% year-on-year reduction in employees. This constitutes a 20% decrease when compared to the 2020 average employee number of 4,196.

The year-on-year reduction “was driven by the in-year effect of the ongoing portfolio strategy within the estate and the finalisation of Project Magnet, which saw a reduction of employees within branches following the rollout of NuPAC and MediPAC”, according to the documents.

Earlier this year, Rowlands managing director Nigel Swift told C+D that all 431 of the multiple's branches now use MediPAC – which was first unveiled in 2019 – while over half of all the prescriptions it processes are dispensed through the system.

“Project Apple”, a project “focused on reviewing core trading hours within England on evenings and weekends”, was also blamed for the reduction in employees, according to the report.

 

8.8% decrease in turnover

 

The losses of £34.65m on ordinary activity after taxation reported by Rowlands are almost three times higher than the figure it recorded in the year ending January 31, 2021, when losses of £11.56m were incurred, according to the report.

Rowlands also reported an 8.8% decrease in turnover compared to the previous financial year – at £403.6m, down from £442.7m.

The report attributed the decrease to “the impact of reduced prescription volumes and the consequent reduction in footfall and over-the-counter sales, and the reduction in the Rowlands store portfolio”.

Read more: Rowlands chief: We've had to really change how we recruit and retain pharmacy teams

Earlier this year, Mr Swift told C+D that Rowlands’ divestment plans are “under constant review”.

According to the financial report, “a number of stores were marketed for sale during the year and a number of stores are held for sale at the year end”.

Pending branch sales are expected to be completed by end of January 2023, according to the report.

Rowlands’ directors “are currently undertaking a retail transformation programme as part of a strategy to return the business to profitable growth”, it noted.

A number of branches also underwent refits during the year, “to improve accessibility to a range of healthcare services and products in their local communities and to encourage colleagues in the front of the shops to spend more time interacting with customers”.

 

“Pharmacy remuneration structure” impacted business

 

Changes to the “pharmacy remuneration structure, such as the Category M mechanism or adjustments to fees paid for dispensing services” have had “a direct impact on the profitability of the business”, the report acknowledged.

While Rowlands regularly monitors changes, these “are often only announced with a short notice period”, the report noted.

“The business monitors these impacts at an individual pharmacy level.”

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Changes to UK customs implemented following the end of the Brexit transition period after December 31, 2021 “have not affected the company’s ability to obtain stock or supply its customers”, the report confirmed. “All sales are made in the UK and amounts imported from the EU are immaterial”, it added.

The war in Ukraine is currently having no impact on Rowlands’ business activities, but management “will continue to monitor the situation”, according to the report said.