In a conference call after its latest financial results were published last Thursday (June 27), Boots’ parent company Walgreens Boots Alliance told analysts that it would close around 200 branches across the UK within the next 18 months, in response to “difficult market conditions in the UK”.
Boots told C+D it could not confirm the locations of the 200 branches as its “store optimisation process” has only just started. However, many are loss-making and two thirds are within walking distance of another Boots pharmacy, the multiple explained.
Walgreens Boots Alliance senior managers described the 200 pharmacies – which represent around 8% of its total UK branches – as “relatively small” and “less efficient” pharmacies, where the main cost to the business is the pharmacist.
Co-chief operating officer Alex Gourlay said: “We have pharmacist turnover like any company would have and we simply see [the closures] as a way to manage the cost, while retaining quality people that we need to take care of customers and communities.”
How will staff be affected?
Boots did not specify how many staff will be affected by the closures, but it does not anticipate it having a significant effect on employees, “as we will redeploy the overwhelming majority to neighbouring stores”, Boots UK managing director Sebastian James claimed.
Boots also claimed it will continue to open new branches and create new jobs, referring to the opening of its new Covent Garden flagship branch last week.
What prompted the closures?
The multiple’s financial struggles aren’t new. In December 2018, Walgreens Boots Alliance announced plans to “improve operational performance” in the UK, as part of a $1 billion global cost-saving programme, after financial results showed a 35% year-on-year drop in Boots UK’s adjusted operating income.
And in February, the multiple announced it was cutting up to 350 roles at its Nottingham head office, in a bid to reduce costs by 20%.
Mr James said last week that the closures are “the right thing to do”.
“There’s no doubt that trading conditions are tough on the high street, and healthcare and retail are facing a challenging reality. Boots is not immune to those pressures,” he said.
“We’re still a very successful company, with a phenomenal presence in the UK, but we need to take some tough decisions to transform the fundamentals of our business.”
Last month, Boots unveiled plans to revamp its beauty strategy and transform its pharmacy offering, including a free online prescription service via the Boots app and website, “express” collection lanes in 600 branches and trialling secure prescription lockers.
How are the other multiples faring?
Boots is not the first multiple to resort to closing or selling branches to offset the effects of the funding pressures in England.
In 2017, Lloydspharmacy announced it would divest around 190 branches, in response to “changes to government policy on reimbursement and retrospective clawbacks over the past two years”. C+D has since identified 78 of the branches Lloydspharmacy closed in 2017-18, and another 104 that it sold.
More recently, Rowlands announced in February it would sell 70 of its branches to focus on a “slightly smaller pharmacy network”.