Walgreens Boots Alliance is looking to “reduce [its] store count by 8%” in the UK through a “store optimisation programme” that targets around 200 loss-making Boots pharmacies, it announced alongside its latest financial results today (June 27).
Around two thirds of the 200 branches are “within walking distance of another Boots” pharmacy, Walgreens Boots Alliance chief financial officer James Kehoe told analysts during a conference call after the results were published.
The company did not say which 200 pharmacies it has earmarked, but co-chief operating officer Alex Gourlay said the branches are “relatively small”, where the main cost to the business is the pharmacist.
Colleagues to be redeployed
Mr Kehoe said the company does not expect there to be “a significant impact on colleagues, [as] we plan to redeploy [them] to nearby stores”.
Closing 200 “less efficient” branches is “quite logical”, he added.
Boots told C+D it cannot confirm the locations of the 200 branches at this stage.
“Reinvigorating the Boots UK model”
Mr Gourlay said the company is “making good progress in terms of reinvigorating the Boots model in the UK in very difficult times”, referencing Boots’ digital and in-store transformation.
Boots’ “store of the future” opened to the public today in Covent Garden, London. See C+D’s behind-the-scenes look at this flagship store.
Mr Gourlay said the new branch “will not only be the future of Boots, but could give us some great ideas for the US market as well”.
Pharmacy sales rise
According to the latest financial results for March-May 2019, Walgreens Boots Alliance saw a 1.6% drop in pharmacy sales in its retail pharmacy international division – which includes Boots – compared with the same period last year.
This drop was “mainly due to a 1% decline in Boots UK”, Walgreens Boots Alliance said. Pharmacy sales within Boots itself increased 0.8%, while retail sales decreased 2.6% “with Boots UK broadly gaining retail market share amid weakness in certain categories”, it added.
Operating income for the retail pharmacy international division decreased 10.5% on a constant currency basis in the same period.
“Our UK pharmacy business was impacted by temporary industry-wide NHS under-funding and higher generic pricing. These impacts were only partially offset by prescription volume growth,” Mr Kehoe explained.