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Boots has closed 18 stores in the past four months and has said it will hit its planned closure programme target of 200 pharmacies by the end of August 2020, following a continued decline in profit since 2018.
The closures come after Walgreens Boots Alliance (WBA) — Boots’s parent company — announced in June 2019 that it would be closing 200 stores due to “difficult market conditions”.
The company’s final report for its US financial year to 31 August 2019 revealed that the multiple’s international (non-US) arm had seen its gross profit decrease by 9.9% when compared with the same financial quarter in 2018.
In a statement, the company said the decrease was due to “lower retail sales and margin in Boots UK, and to lower pharmacy margin”.
Pharmacy sales in Boots stores also decreased by 1% in the past year “primarily due to lower volume and lower NHS funding levels in the UK,” the statement added.
Speaking to shareholders, James Kehoe, global chief financial officer at WBA, said the company’s “adjusted operating income was down 20.7% in the quarter and down 16.2% in the year, mainly due to weak retail sales and pressure on retail and pharmacy margins in the UK”.
Alex Gourlay, co-chief operating officer for WBA, added that the company is continuing “to take actions to address our UK cost base,” including the completion of plans announced in February 2019 to reduce Boots head office costs by 20%.
“In June [2019] we announced a store optimisation programme that will impact around 200 Boots locations,” he said.
“We reduced the store count by 18 stores by the end of the fiscal year and are on track to consolidate the remainder by the end of 2020.”
The slides accompanying the presentation to shareholders clarified that the remaining 182 pharmacies would close by the end of the 2020 financial year, which for WBA is 31 August 2020.
Gourlay added that the company has “also generated cost reductions through simplification of our care home operations and our supply chain”.
Boots has faced ongoing financial difficulties, having launched a three-year “transformational cost-management program” in December 2018, with an initial target of saving $1bn by the end of the third year.
However, during its latest fiscal report, WBA announced it would be increasing its savings target to $1.8bn by fiscal year 2022.
