Strepsils maker Boots struggles with retail slackening: sales drop in Q1 |
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Fri, 22 Jul 2005 04:05
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LONDON: The slackening on high street has reflected on retailer Boots’ first quarter earnings which mark a further drop in sales. The company explained that despite the drop the performance could be regarded “reasonable” considering the tough trading environment.
Intense competition and heavy discounting had failed to spur consumer action. The general disinclination to spend continued for the sixth month which had pushed like-for-like sales down by 0.8 percent in Q1 although total sales at its 1400-store chain were up 1.5 pct. The decline had dipped to the troughs of market expectations, which range from about minus 1 percent to plus 2 percent.
‘Total sales’ includes health product sales which rose 1 percent; and sales of beauty products and toiletries also rose by 3.5 percent. ‘Over-the-counter’ (OTC) medicines sales were also strong. In contrast, ‘lifestyle’ category products sales were pushed back 2.5 percent.
The retailer had made every attempt in the book to buffer the slowdown and the competition by supermarket groups that were encroaching into its core business of ‘OTC’ drugs. Besides cutting prices, Boots The Chemist had extended opening hours, improved the interiors of stores and revamped supply chains.
A market analyst noted that overall sales performance was no different from that seen in February and March.
The company’s Healthcare International division, known for the globally successful brands Strepsils and Nurofen, is relatively better off with comparable sales rising by 6.8 percent. The division, worth over £1bn, has been up for sale as announced by the company some time back. A spokesman for BH said more than 10 groups have expressed interest in buying the business. The sale of this division is part of Boots’ recovery plan.
The company had forewarned (in May) the impact of the slowdown and tough market environment while announcing last year’s results which had shown an 11 percent drop in profits. The current scenario is expected to continue for some more months making early recovery difficult to expect.
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