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Boots profit rises despite sales dip

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The parent company of UK-based health & beauty retailer Boots has today reported a 6.1 per cent rise in trading profit in its full year despite a decrease in sales, in what it described as “a transformational year”.

For the year ended March 31st 2013, revenue at Alliance Boots dipped 2.6 per cent to £22.4 billion though EBITDA jumped 4.5 per cent to £1.51 billion and the group noted that its new strategic partnership with US chain Walgreens has helped strengthen its position in a difficult market.

Last June, the US giant acquired a 45 per cent stake in Alliance Boots](/articles/00020-us-giant-walgreens-acquires-45-interest-in-boots) with a merger expected between the pair as the latter seeks to broaden its scope in the pharmacy market.

Commenting on the figures, Executive Chairman of Alliance Boots Stefano Pessina said: “This has been a transformational year for Alliance Boots due to our exciting new strategic partnership with

“Walgreens, which we are further strengthening by our recent joint agreement to partner with AmerisourceBergen.

“Against the backdrop of this major corporate activity, and the challenging conditions across our markets, we have again delivered a double digit growth in underlying profit after tax.

“Our people are at the heart of everything we do and it is through clear leadership combined with great teamwork that we have been able to deliver such consistently good results.”

Across its health & beauty division, trading profit increased 6.8 per cent on a year earlier to £865 million while overall UK trading profit soared 8.8 per cent to £813 million.

Boots UK saw LFLs fall 3.1 per cent over the period, though its opticians arm reported a 2.7 per cent boost while total sales in the division edged up 0.9 per cent.

Internationally, revenues outside the UK totalled £935 million, down 3.1 per cent while trading profit declined 17.5 per cent on a reported basis as the group added a net 26 stores during the year, primarily in Thailand, which saw LFL sales grow 3.7 per cent.

Meanwhile, LFL sales in the Republic of Ireland decreased 4.4 per cent on the same period last year while Boots’ operations in Norway and the Netherlands saw a 1.6 per cent and 12.5 per cent fall in sales respectively.

A statement from the group acknowledged the mixed results, saying: “Our Health & Beauty Division delivered a good overall performance, despite tough retail markets across Europe and further regulatory pressures which impacted dispensing profitability.

“The UK profit performance was particularly strong due to a focus on our core health and beauty categories, combined with the benefits of further development of the operating platform.

“Results were, however, disappointing across our other European markets, which were partially offset by good progress in building profitable sales in Asia and North America.”

As consumers continue to exercise cautious spending amid economic uncertainty, Boots’ loyalty scheme has seen a boost in members, currently standing at 17.9 million as over 60 per cent of retail transactions are now made by Boots Advantage Card holders.

Nearly two-thirds of the adult female population in the UK are now Boots loyalty card holders, the retailer noted, as over 90 per cent of its active members are now women.

Pessina concluded: “We continue to be confident about our prospects and ability to pursue profitable growth, organically, from our synergy programmes and through international expansion.

“In a world where globalisation is increasing at a pace, our transformational partnerships put us together in a unique position to become the clear world leader in both pharmacy and pharmaceutical wholesale.

“I truly believe that we have the brands, intellectual capital and, most importantly, the management expertise to create value for our stakeholders across the world for many years ahead.”

Published on Wednesday 15 May by Editorial Assistant

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