Boots' advantage over the likes of Tesco is that its focus on healthcare and beauty is a perfect forum for brand building. Tins of beans come in limited varieties. Shampoos, bathfoam and lipsticks offer much more scope for the creative marketing manager. Boots' own-brands, such as No.7 skincare, are selling well.
With its own manufacturing, Boots can develop innovative product lines fast. Happily BTC is also in one of the fastest growing retail markets - health and beauty products. Demand here drove up BTC sales 4.8 per cent like-for-like and profits by 10 per cent, despite poor summer weather and the Diana effect which cost pounds 9m in lost sales.
Anyone can sell a vitamin or a toothpaste and Boots with its grounding in pharmacy is exploring ways to offer consultation on top. Concept stores offering customers advice on tooth and skin care should be rolled out over the next three years. It sounds like a great way to keep people in the shops and buying for longer.
Lord Blyth, chief executive, spies plenty of gaps in which to plug a BTC shop. The high street stores, currently 1300 in number could be expanded by 40 new shops a year with 21 larger edge of town stores expected by the year-end. Though early days, the Advantage Card, launched September 1st at a cost of pounds 9m, looks like it will be a winner with applications already exceeding 4 million, making the 8 million card, 12 month target look beatable. Of the other retail businesses, Do-It-All is recovering and in profit of this stronger first half, paving the way for an eventual sell-off and profits at Halfords, the car parts retailer, surged 40 per cent.
With risk-shy investors piling into defensive stocks, the group's rating of 20 times on pounds 560m profits for the full year now looks full. Hold for now.Reuse content