Boots chain reports 30% sales drop at retail sites in UK

Sales at Boots slumped nearly 30% in the three months to the end of August as shoppers stayed away from town centres and picked up health goods at supermarkets instead.

Over the three-month period, the UK retailer has lost share in every market in which it operates, except for beauty. Shoppers shunned its stores and opted to pick up pain relief, shampoo and soaps at the same time as their groceries, driven by fears of catching Covid-19.

Walgreens Boots Alliance, owner of Boots, said the chain’s city centre and travel sites had been most affected because of a decline in tourism and the switch to working from home. Online sales at Boots jumped 155% over the three-month period.

The sales fall at Boots’ established retail sites in the period was an improvement on the 48% drop in the previous quarter, but profit margins fell by a much higher rate and helped to drag Walgreens’ international division, which consists largely of the UK company, to a $3m quarterly operating loss, compared with a $194m profit a year before.

Last year Boots said it would close about 200 stores as part of its parent company’s effort to save $2bn in costs by 2022. So far 138 stores have closed.

In June Boots said it would cut 4,000 jobs – 7% of its workforce – amid closures of its 48 optician outlets and roles shed at its head office and at stores.

Walgreens said it expected trading to continue to be tough over the next six months, but to pick up in 2021, predicting that vaccines forCovid-19 would become available and lockdowns would ease around the world.

But the company’s chairman, James Skinner, told City analysts: “We think the UK is the country where there might be [further] lockdowns. It is quite unpredictable. We don’t see major risk in the US, but the UK presents risks to the [sales] projections.”

He said the company was assuming that trading would gradually improve in the UK, but that a “significant lockdown” would have a negative impact on trading.

He said Boots had carried out more than 1m Covid-19 tests for the government in the UK and might also benefit from distributing vaccines around the world, but trading could be worse than anticipated if governments forced stores to close again.

Walgreens said it was increasing investment – in digital services and store links to online shopping across the entire group – by $400m to $1bn in the year ahead because the pandemic had accelerated the switch away from high streets.

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