Alliance Boots Stefano Pessina eyes more deals before retirement

Pessina, who is in his 70s, said with just months to go until Alliance Boots is expected to merge with Walgreens, the business can turn its attention to new deals.

Pessina, who did not give any indication of when he may retire, told Retail Week: “We have quite a good pipeline of potential deals. We have to look at three or four options when we want to do a deal somewhere.

“And I hope we’ll do more than one deal [before leaving], maybe some really substantial deals. We are still so far from being really global and the opportunities are really there.”

Pessina secured a tie-up with US drugstore giant Walgreens in 2012 in a ground-breaking deal to make the group a global pharmaceutical leader. The window for the full merger opens in February. Last year it also entered into a deal with US drug distribution firm AmerisourceBergen.

And last week the group revealed it had bought two pharmacy retail chains in Latin America, adding 1,400 stores to its overall estate. Latin America had been a long-term target for Pessina.

He added: “In the last year we have not been particularly focused on deals. Initially, we had to focus on the huge debt and restructure and after we had two American deals which took a lot of time and we’ve had the merger.

“Until now we didn’t really have the focus to execute many deals. Once we have done the deal with Walgreens we will focus on external expansion.”

It comes as Alliance Boots reported its annual figures for the year to March 31, 2014, when trading profit was up 0.4% to £1.27bn and revenue increased 4.3% to £23.4bn. The group generated cash of £1.54bn.

The health and beauty division, which encompasses Boots, delivered trading profit up 2.4% to £886m and sales up 2.4% to £7.66bn. Boots’ UK division, which includes Boots Opticians, posted trading profit up 2.1% to £830m and sales growth of 2.3% to £6.697bn.

Store like-for-like growth increased 1.3%. Online sales surged 30%. However Alliance Boots finance director George Fairweather said gross margins in beauty fell after Boots cut prices in response to competition online and from department stores.

Pessina said the results were “good” considering the time taken to ensure the smooth-running of the merger with Walgreens, difficult trading in Russia, Turkey, Germany and France and a highly competitive market where consumers are looking for a bargain.

Alliance Boots said it is differentiating its offer by developing new own brand products, such as its improved No7 Protect and Perfect serum which went on sale yesterday. It is also leveraging technology to launch new services, such as its new photo offer based on technology used by Walgreens. As part of its pharmaceutical business it is also trialling an automated dispensing hub in the Alliance Healthcare facility in Preston, initially serving 50 pharmacies.

At year-end the retailer had 2,487 health and beauty stores. Alliance Boots also revealed it acquired 17-strong pharmacy chain Burrows & Close since year end, which will be converted to the ‘your local Boots pharmacy’ format.