Walgreens Boots Alliance announced in June that it would “reduce [its] store count by 8%” in the UK within the next 18 months through a “store optimisation programme” targeting around 200 loss-making Boots pharmacies, in response to “difficult market conditions”.
Announcing its latest financial results yesterday (October 28), the company said it had already closed 18 of the planned 200 branches in June-August and is “on track to consolidate the remainder” by the end of its fiscal year, August 2020.
In a conference call, Walgreens Boots Alliance global chief financial officer James Kehoe said the company has “completed the review of our real estate footprint and the actions are well underway in both the US and the UK”.
“Dedicated teams are working hard against our biggest programs, particularly pharmacy costs to fill and shrink,” he added.
Measures to reduce cost base
On the same call, co-chief operating officer and president Alex Gourlay told analysts that Walgreens Boots Alliance “continues to take actions to address our UK cost base”, including having already cut up to 350 jobs at Boots’ Nottingham headquarters to reduce head office costs by around 20%.
“We have also generated cost reductions through simplification of our care home operations and the supply chain,” Mr Gourlay said.
He pointed to the “number of initiatives to transform our retail offering, develop healthier services and accelerate digitalisation in the UK”, including a free online prescription service via the Boots app and website and the opening of two flagship branches – in Covent Garden, London and most recently Meadowhall in Sheffield.
“We’re developing new initiatives in digital healthcare, with plans for expanding pharmacy services to improve the customer journey and broaden access to healthcare,” he added on the call.
Boots UK sales drop
According to its latest financial results, Walgreens Boots Alliance saw a 20.7% drop in profits for its retail pharmacy international division – which includes Boots UK – in the three months to August, which followed a 10.5% year-on-year drop recorded in the three months to May.
Boots UK specifically saw a 2% drop in comparable pharmacy sales, “reflecting lower script volume and a lower NHS funding level”, Walgreens Boots Alliance revealed in a presentation published alongside the financial results.
Comparable retail sales for Boots UK decreased 3.1%, “as the UK market continued to be very challenging”, it added.