Boots first-quarter profits slide despite online sales surge

In the quarter to November 30, Boots’ adjusted gross profit declined 11.5% year on year, exacerbated by a 9.1% decline in like-for-like sales across its retail division.

The health and beauty retailer said this sales decline, which it attributed to the impact of Covid-19 on footfall across its high street and travel locations, was partially offset by a surge in online sales during the period, which spiked 106% year on year.

Boots’ like-for-like pharmacy sales increased 2.5% during the period, bolstered by an NHS reimbursement.

The health and beauty retailer’s market share decreased in all categories bar beauty in the quarter, which the business attributed to the impact of the ongoing pandemic on consumer shopping habits and spending temporarily shifting as consumers favoured one-stop grocery shopping.

Boots’ parent company Walgreens Boots Alliance reported a 5.7% increase in sales to $36.3bn (£26.7bn) year on year, although the group’s adjusted operating income declined 9.9% year on year to $1.3bn (£960m).

Walgreens Boots Alliance also unveiled plans to sell off its wholesale healthcare division this week for £4.8bn, which the business said would be reinvested into its retail divisions in the US and UK.

Executive vice chair and chief executive Stefano Pessina said: “Our first-quarter results exceeded expectations as we continue to deliver on our strategic priorities.

“As announced yesterday, we have taken a major step forward in our transformation; we are divesting our pharmaceutical wholesale business with plans to use the proceeds to accelerate our investments in healthcare.

“While the business environment remains challenging, we are rising to the occasion with agility and discipline and we are confident in our outlook for adjusted EPS [earnings per share] for the fiscal year.

“Our role in the healthcare system has never been more important as the communities we serve continue to turn to our trusted brands and expert pharmacists.”