Boots UK third quarter profits slumped as the pharmacy chain proved the latest victim of declining footfall on the high street.
The drug retailer reported an 8.5% fall in gross profits in the three-month period to May 31 as sales at its UK retail arm reduced by 2.6%. Pharmacy sales in the same period, rose marginally, up 0.8%.
The results come on the back of an overhaul of the chemist’s UK business announced by managing director Seb James this week.
The restructuring will see the creation of a new shop format as part of plans to “rationalise” the company’s estate and reduce the number of stores.
The latest figures were released alongside Boots’ parent company, Walgreens Boots Alliance (WBA), third quarter results, which showed a 4.2% decrease in gross profits to $7.45bn. At a group level, pretax profit reduced to $1.20bn from $1.44bn.
Sales however, rose 0.7% to $34.59bn driven by a strong performance of WBA’s US retail pharmacy business and wholesale division.
The company’s US division accounts for roughly 77% of turnover, with the rest generated by its wholesale unit and 8 international markets including UK, Mexico and Chile.
“Following a difficult second quarter, we made progress in the third quarter against the strategic goals we set and are pleased to report an improvement in our US comparable growth compared with the first half of the year,” WBA vice chairman and CEO Stefano Pessina said.
“We will continue our aggressive response to rapidly shifting trends and have already seen improved US retail sales and prescription growth and are making good progress in implementing our transformational cost management program.”
On the back of the strong US performance, the international pharmacy group reiterated its annual guidance, forecasting adjusted earnings per share “broadly flat” on last year’s $6.02.
Looking at the nine months to the end of May, WBA’s turnover rose 4.9% year-on-year to $102.9bn while pretax profits were down 11% to $3.82bn.
Walgreens Boots Alliance shares were trading 4.4% higher at $54.68 in New York on Thursday afternoon.
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