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Lloyds attributes 2019/20 fallen turnover on its ‘portfolio reduction’

Loss of market share in part due to branch rationalisation

Lloydspharmacy’s turnover in 2019/20 was down on the previous year, which the multiple has “largely” attributed to the reduction in the number of its branches in England.

Turnover for the year up to March 2020 was £1.95 billion, 1.6% down on the 2018/19 figure of £1.98bn, the multiple said in its financial reports for 2019/20, uploaded to Companies House last week (June 23).

The multiple saw “some loss of market share” following its decision to “rationalise” its branch portfolio, it reported.

However, Lloydspharmacy said its results also reflect “reductions in government reimbursement, the ongoing impact of the company’s multi-year transformation initiative and impairments of certain of our investments”.

The government’s reductions in pharmacy reimbursement or remuneration have contributed to increasing competition, the multiple added. Lloydspharmacy has to “strive even harder” to retain its customers, especially in light of “aggressive targeting of patients by competitors, including mail order pharmacies”.

Multiple’s work during the pandemic

A spokesperson for McKesson UK – Lloydspharmacy’s parent company – told C+D today (June 28) that the accounts relate to a pre-COVID-19 period.

However, during the pandemic, “Lloydspharmacy has continued to innovate as we evolve towards a scaled omnichannel pharmacy approach”, the spokesperson added.

Offering patients and customers a choice to interact with the multiple “in a way that is convenient for them… positions Lloydspharmacy to be at the forefront of community healthcare throughout the UK, caring for over nine million patients and customers every year”, the spokesperson said.

Last August, McKesson reported a 300% revenue rise for its prescription management app Echo, compared to before the outbreak of COVID-19.

However, while the multiple “strives to change to deliver more efficiency and higher-value services for our patients”, it also “relies on more tangible support from landlords and suppliers, and importantly a more sustainable government funding model”, the spokesperson told C+D today.

In November last year, Lloydspharmacy announced it had closed 99 branches in the previous 12 months, and that it was seeking a 25% rent reduction for nearly a quarter of its sites in England, for which NHS Property Services (NHSPS) is the landlord.

NHSPS told C+D in March that it was conducting a “full review” of the sites Lloydspharmacy leases from the organisation.

5 Comments
Question: 
What do you make of Lloydspharmacy's financial accounts for 2019/20?

TC PA, Community pharmacist

Hard to know where to start with Lloyds.

Foolishly taking on 100hr contracts so they can dispense a few thousand items a month from a supermarket location.

Setting up health centre locations with very high rent rates.

A homecare arm of the business that provides MDS to every care home that asks.

Branches that are run choatically with ever changing staff trying to provide services that bring in next to nothing in profit.

Over bloated with middle management and departments at head office with too many staff.

That's only based on doing a some locum shifts a few years ago and speaking to former and current staff. Others can probably add a lot more to this list.

I can see why they are promoting the ECHO service heavily. The goal must be to close or sell more loss making sites and get patients to switch online.

Ian Scott, Primary care pharmacist

Any losses are due to incompentent management.  Closing stores temporarily due to a lack of a pharmacist when locums in the area were available is bad business and unethical.

Axed Locum, Locum pharmacist

 

Here is the link to the accounts filed at companies house:

https://find-and-update.company-information.service.gov.uk/company/00758153/filing-history

Key points to note are that the goodwill of 0.5bn has been written off to Zero, against the P & L accounts.Therefore any goodwill genertaed from sales will be offset against losses, and represent profit, if in excess of 0.5bn!!

So what is the group worth?

Staff levels dropped, from 16905 to 15447,

Costs dropped by approx 5%,

Gross directors remuneration increased by approx 20%,

Highest paid directors emulments went up from 832,000 to 1.1 million,

Locum Rates Frozen, and staff support reduced.

 

 

 

Brian Perry, Locum pharmacist

I think that the correct figure for the turnover is £1.95 billion not million as stated. Losses were  £196 million i.e ~10% of turnover.

Glad it's not my task to turn that around. How many of the individual branches can be described as being in profit?

Valeria Fiore, Editorial

Thanks for bringing this to our attention, Brian.

The article has been updated accordingly. 

Best,

The C+D editorial team

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