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Lloydspharmacy reports £66m loss despite efforts to ‘optimise estate’

Lloydspharmacy made a net loss of £66m in the last financial year, accounts submitted to Companies House show.

In its financial report for the year ending March 31 2022, the company said that COVID-19 had put “great strain” on the healthcare sector and that “the government funding model for community pharmacy in England continues to be challenging”.

Overall turnover fell by 3.4% to £1.7 billion in 2021/22, according to the accounts filing published last week (February 22).

Read more: Lloydspharmacy: PDA considering ‘legal action’ over redundancy dispute

But Lloydspharmacy had reduced its losses by more than a third (34.5%) compared to the previous year – when it had made a £100m loss compared with a £66m net loss in 2021/22.

 

“Optimising estate”

 

To address the challenges in the business, Lloydspharmacy worked to improve its performance “with the interests of the community in mind”, it said.

“We continued to optimise the Lloydspharmacy estate, to enable it to operate sustainably”, it added, as well as working with many landlords to “regear our property costs”.

Read more: DH 'assessing potential impact' of Lloydspharmacy Sainsbury's exit

The report said that “all of these actions” had a “positive impact” on the company’s financial position by “reducing losses for the year by 37%”.

“By actively optimising its portfolio of pharmacies, Lloydspharmacy’s losses for the year have reduced significantly,” it added.

Read more: CCA: At least 720 English pharmacies permanently closed since 2015

It noted that as of  March 31 2022, the company had 1,275 community pharmacies - down from 1,316 in the previous year.

And it reiterated that it would be withdrawing pharmacy services from all Sainsbury’s stores during 2023 “in response to changing market conditions”.

Read more: Lloydspharmacy quits Sainsbury’s: What we do (and don't) know so far

 

It is as yet unclear what will happen to the 237 Lloydspharmacy branches currently based in Sainsbury’s stores.

 

“Lower losses were also achieved through lower interest expense, impairment charges and a higher tax benefit,” the report added.

 

Online growth

 

A healthier performance was seen on the online side of the business, with directors saying they were “particularly pleased with [the company’s] delivery in digital revenue this year”.

The lloydspharmacy.com website grew by 28% in 2021/22, while Lloydspharmacy Online Doctor saw 3% growth and LloydsDirect grew by 55%, the report said.

Read more: Scottish online pharmacy secures £10m cash injection to expand across UK

Overall pharmacy sales accounted for a slightly smaller share of revenue in the past year – falling to 87.7% of total sales compared with 91.4% in 2020/21, with retail showing an increase.

 

Competition to attract talent

 

In the filing, Lloydspharmacy said that government reductions in pharmacy reimbursement had “increased competition” in England for patients – including by “mail-order pharmacies” – as well as for store locations and pharmacy staff, “particularly pharmacists”.

“This is a sector-wide issue and we are working with the relevant associations and the NHS to find a solution,” the report said.

Read more: Six in 10 independent pharmacies cut staff to ‘limit costs’ in 2022

The average monthly number of employees in Lloydspharmacy stores fell from 13,762 to 11,965 in 2022, while the administrative staff headcount increased slightly from 917 to 946, it added.

Overall staff costs including wages and salaries and directors’ remuneration fell from £301m to £263m, the accounts show.

It comes as the pharmacy chain last month said it would not retender for its contract to provide pharmacy services in Scottish prisons.

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