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Boots' operating profit falls 22% in one year

Boots' revenue also fell during the same period, from £6.9bn to £6.8bn

Operating profits at Boots fell by 22.3% in the 12 months to August 2018, compared with the same period the previous year, the multiple has revealed.

Boots’ operating profit for the year ending August 31, 2018 was £391 million, a £112m drop from the £503m recorded for the previous 12 months, the multiple said in its annual report published last Friday (May 10).

It recorded overall profits of £317m in 2018, a fall of 18.3% compared with 2017, while revenue fell 2.3% to £6.8bn.

The health and beauty giant explained in its report that its pharmacy sales and profits are impacted by category M clawbacks and the government “seeking to minimise increases in the costs of healthcare”.

Last month, Boots’ parent company Walgreens Boots Alliance said it would take “immediate action” in the UK – including a “store portfolio review” – to address financial results “much weaker than expected”.

In February, the multiple announced it was cutting up to 350 head office roles, in a bid to reduce costs by 20%.

Mitigating risks

Boots used its report to identify potential future risks to the company, including “changes to licensing regimes for pharmacies, prescription processing regimes or reimbursement changes”.

To mitigate the adverse effects of regulation changes, Boots said it seeks “active involvement in policy-making processes, understanding and contributing to government thinking on regulatory matters and building relationships with regulatory bodies, directly and through representation in relevant professional and trade associations”.

Boots could also be “adversely impacted” by “allowing infiltration of counterfeit products into the supply chain, errors in relabelling of products and contamination or product mishandling issues”, it said in the report.

However, the multiple has “specific controls for the identification of counterfeit product[s]”, “a rigorous governance framework” in all its pharmacies and “regular dispensing compliance reviews to ensure individual pharmacies follow approved processes”, it added.

17 Comments
Question: 
What do you make of Boots' financial report?

George Ibrahim, Community pharmacist

Amazon X Deliveroo just happened, I suspect a prime now offering of prescription deliveries would be transformative for customers and leave boots reeling further - 100 hour pharmacies as the backbone alongside the EPS spine communications developments.

Benie I, Locum pharmacist

When they were reporting record profits they were driving down wages. Only God knows what they're doing now.

Farmer Cyst, Community pharmacist

Uh oh....if you're one of the few pharmacists left that is on a half decent contract with Boots I'd expect your ex-Carphone Warehouse working area manager to find some 'MUR irregularities' by the end of the week.

Kirit Shah, Community pharmacist

Still cannot acces the report-gremlins in the pipeline!

Sue Per, Locum pharmacist

Profits still too good, in these tough retailing times. The tax-payer is still fairly generous, and needs to impose some more cuts, until the pips really squeak.

Kav Singh, Community pharmacist

Bitter troll

Sue Per, Locum pharmacist

Not a bitter troll, but a troll treated with contempt, bullied and harrased, and the perpatrators need to share and suffer the same!! 

Follow the news!! Look at the number of other business that have suffered large decline in profits. The tax payer is generous, and this is the sole reason why the pharmacies have not had a relatively tough time, like the other businesses.The taxpayer is entitled to quality and value for its funding.

Time to skill up, and prove your worth, and not skill down, running sweat shops. Leave the robotic work to the robots. 

Interleukin -2, Community pharmacist

Can you please shed more light on what exactly you mean by "skilling up" ? Am genuinely confusesd here ?

Sue Per, Locum pharmacist

Skill up by providing more clinical services, such as diagnostics, health checks etc,  as opposed to skilling down, by enrolling people onto MDS when not necessary, collection, deliveries, haggling for discounts, other malpractices such as "specialgate" and "Murgate" . You must also note that the "volume led" contract is funded by the tax Payer, and the contract excludes activities such as "MDS", colletions, deliveries etc, the expense of the latter which is offset against the payments from NHS payments resulting in all probabilty, the cause of lower remuneration for the pharmacist!!

 

A.S. Singh, Community pharmacist

'Documents filed with Companies House in December show Pharmacy2U – which claims on its website to be the UK’s largest online pharmacy – “made a loss of £20,303,000 for the year ended March 31, 2017” – compared with a £2.4m loss for the previous financial year.' Although this may be skewed, even so, is this proving worth? Or are we going to read the times article on robotic dispensing and jump on the bandwagon?

Sue Per, Locum pharmacist

Look at all the accounts under "Dispensing Chemists", at the Compenies house. and you will be plesantly surprised with the healthy balance sheets!!, Pharmacy2u is the metaphotric "Black Sheep"

Kav Singh, Community pharmacist

Healthy balance sheet?? Omg a company making a profit. Its not like Boots have a large OTC or large beauty offering. Hahahahahaha. Give it a rest.

Kav Singh, Community pharmacist

You dont sound bitter at all. Lol. Time to skill up??? Robots??? Sorry but you dont have a clue. Taken the easy route of being a locum. Just for your information although I dont think your going to get it. The price of generics are the lowest in the whole of europe. This has been achieved through the sector driving prices down and the DOH using the £800m allowance. In return it has saved the taxpayer Billions, which I dont think is a bad return for what is paid in return.

Sue Per, Locum pharmacist

There is volatility in the prices of drugs, and this is due to manipulation to some extent. The so called "allowance" that you refer to is Purchase Profit, and it has already been determined in a court of law, that the paymaster is entitled to clawback!!, and not for the contractor to keep. I believe the purchase profit is much greater than that is clawed back, and is retained by the pharmacies , and hence the healthy balance sheets!!. You are in denial, because of futher clawbacks, which the tax payer should implement without any delay

Taranpreet Mundae, Locum pharmacist

Sorry the link is still not working for me. 

Barry Pharmacist, Community pharmacist

Dear Ed, the link to the Annual Report isn't working.

It would be good to see the detail in the report.

James Waldron, Editorial

Thank you for flagging. This seems to be a recurring issue with links to Companies House, but I've now replaced it so it should be working.

Regards,

James Waldron, C+D Editor

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