Boots fights off soft consumer spending
The impact of regulatory price deflation in Dispensing is estimated to have reduced overall LFL sales for BTC by around 1.0% in H1.
Sales growth in Boots The Chemists (BTC) in the half is expected to be 1.1%, -1.3% Like for Like (LFL).
The company said that the performance was encouraging in Health and Beauty and Toiletries, showing the benefit of the investments made in these businesses. Dispensing continued to see strong volume growth offset by price deflation resulting from
the changes to drug reimbursement prices set out in the Q1 trading update. In Beauty, sales of Cosmetics benefited from the investment in new beauty halls and self-selection merchandising units and from the relaunches of the No7 and 17 brands. Suncare continued to perform well, with strong growth in the Soltan brand, while Skin and Dental both saw sales growth from new product launches. Trading was more difficult in other categories; Food, Photo and Electrical all saw sales declines.
Boots Healthcare International (BHI) sales growth in the quarter is expected to be 9.0% in Sterling, up 8.3% on a comparable basis. Sales of core brands are expected to be up 9.3%. The proposed disposal of BHI is on track.
Richard Baker, Chief Executive said “The encouraging performance of our health and beauty businesses in a tough retail climate reflects our renewed focus and investment in these growing markets. Trading conditions have been difficult throughout the first half with consumer spending softening further over the last quarter and we see no sign that the market will get any easier for the rest of the year. Our priority for the second half continues to be delivering for our customers while managing our trading margin, costs and working capital”.
