Retail sales down at Boots but beauty giant hangs on to market share

By

Sandra Halliday

Published
Jan 9, 2020

Multinational giant Walgreens Boots Alliance has reported its results for Q1 and the performance of the UK-based Boots chain within that was clearly disappointing. 

In fact, the parent company blamed a 3.6% drop in its adjusted gross profit on falling retail sales and lower margins at its UK operation as the international retail division, of which Boots is a part, had a tough time in the three months from September to November last year.

Boots may be the top beauty products retailer in Britain but the division’s comparable sales fell 3% on a currency-neutral basis in the quarter, although there was good news that Boots managed to hold on to its market share, albeit in a declining market. Total international retail division sales fell 2.7% to $2.7 billion (£2.1 billion). 

Also good news was the fact that it saw double-digit growth online, following on from a near-15% e-sales rise in the previous financial year. It was boosted by record online sales in the UK over the Black Friday weekend with a 25% increase.

But the overall figures didn’t impress analysts. GlobalData’s Kate Ormrod said: ‘‘Disappointing results are a consistent theme in Boots UK’s quarterly trading performance, with no sign of a return to good health as the retailer remains engulfed by its strategic overhaul. The health & beauty market leader has now closed 28 branches out of its 200 target, and revamped 26 beauty halls, while rebalancing its product offer in 200 stores – all necessary actions, but increased efforts are required to affect faster change given the size of its portfolio”.

She thinks Boots needs to “better exploit its competitors’ weaknesses, with opportunity at present to steal premium shoppers from Debenhams and House of Fraser, as its product offer is far better suited to their retreating customers’ high-end tastes than its closest rival Superdrug”.