The parent company of Boots has said it will look into “consolidation” of low-performing stores in the UK following a “disappointing” financial year.
Following the launch of Walgreens Boots Alliance’s US second quarter earnings report for 2019, Stefano Pessina, the executive vice chairman and chief executive officer, said the company had the “most difficult quarter we have had since the formation” of the company, with operating income having decreased by 23% in the past year.
Sales for Walgreens Boots Alliance’s international arm — outside the United States — decreased by 1.2% in the past year “mainly due to a 1.3% decline in Boots UK” sales.
And speaking at a presentation of its second quarter earnings report, Alex Gourlay, co-chief operating officer and president of Walgreens Boots Alliance, said the company has “taken decisive action to reduce” its UK costs.
“A store portfolio review is underway, focusing on low-performing stores and opportunities for consolidation,” he said.
“In addition, we are looking closely at our pharmacy business to further improve efficiency and effectiveness.”
Walgreens Boots Alliance had already announced in February 2019 that it would be cutting the number of employees working in Boots’s head office in Nottingham by 20% “to create a smaller and more agile team”.
Meanwhile, James Kehoe, chief financial officer of Walgreens Boots Alliance, announced that a “transformation programme” of its business, which was due to save US$1bn by 2022, has been increased to US$1.5bn.
“Last quarter we launched the programme targeting annual savings in excess of US$1bn, we also told you we needed to complete a 16-week assessment phase,” said Kehoe. “We are now three months in and, while we are not fully complete, we do have a much deeper understanding of the areas of potential savings.”
He added: “Given what we have seen to date, we are increasing our annual cost-saving targets to at least US$1.5bn.”
Paul Day, national officer of the Pharmacists’ Defence Association Union, which became the official union representing Boots pharmacists in March 2019, said it would be looking at what this announcement would “mean for stores across the UK”.