But advantage card take-up increases
Profits have fallen at health and beauty retailer Boots, but sales continue to rise.

In the group's final results published today, it said pre-tax profits dropped 3.1 per cent to£349 million, from£360 million last year.

Like-for-like revenues were up 0.6 per cent for the year to March 31. Total revenue was up 1.9 per cent to£5.01 billion.

Same store footfall was down 3.6 per cent over the year. However, advantage card transactions were up 8 per cent, driven by Boots signing a record 2 million new cardholders - the most successful year for recruitment since the scheme began in 1997.

There are now 15 million advantage card holders across the UK. The retailer's latest project - Boots Health Club - attracted 500,000 members in the first three weeks.

Chief executive Richard Baker said: 'We have grown our core health and beauty business, improved our product range and sharpened our pricing in what has been a tough year for UK retailing. We have differentiated ourselves from the competition and taken long-term decisions to improve our efficiency.'

The merger with pharmaceutical giant Alliance UniChem was given the green light by the Competition Appeals Tribunal last week.

Boots said it expected the merger to be completed by the end of July and 'plans for delivering£100 million cost synergies are progressing well'.

Baker added: 'We look forward to the merger with great confidence about the exciting opportunities it can deliver for customers, shareholders and employees.'

During the last financial year, Boots sold its international business for£1.9 billion.£1.4 billion was returned to shareholders. Of the remainder,£85 million was put into pension funds and a further£275 million was invested in small stores and supply chain and IT arrangements.

Analyst Simon Proctor said: 'While the market was expecting a fall in profits, the magnitude of the slump was worse than we or the market were expecting. At the root of the slump is a fall in operating margins at the core Boots the Chemist business. It is difficult to see how, without the merger, Boots could significantly improve operating margins.'

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