Boots 'on track' for getting in shape

Boots shares rose to a new 12-month high yesterday after the retailer reported strong first-quarter trading in its Boots the Chemists stores.

The 1,400-strong high street chain saw like-for-like sales rise by 4.6 per cent on last year. The sunny weather boosted sales of sunscreens and hayfever treatments.

Boots is concentrating on its core health and beauty ranges after abandoning the expensive foray into "wellbeing services" pioneered by former chief executive Steve Russell. Ex-Asda man Richard Baker does not take up his post as Boots' new chief executive until 15 September but he is expected to make Boots more price competitive against the major supermarkets.

Gross margins were ahead of last year with the "getting in shape" cost-saving programme "on track," the company said.

"The shares are in a holding pattern until the new chief executive and his strategy emerge," Tony Shiret, retail analyst at Credit Suisse First Boston, said

At the company's annual shareholding meeting yesterday some investors questioned whether chairman-designate Sir Nigel Rudd, would have sufficient time to devote to his role at Boots since he is also also chairman of Pilkington, Pendragon and Kidde, though he is set to give up the Kidde role.

He tried to reassure shareholders that the Boots job would take up most of his time. His appointment was approved although only a quarter of shareholders voted.

Analysts have turned more positive on Boots since the Wellbeing strategy was abandoned and Investec Securities issued a positive research note on the company. One broker said: "We were particularly impressed with the growth in the gross margin given the increased promotional activity via the 'prices you'll love campaign'."

The shares have been helped by a proposed shake-up of the pharmacy market being watered down by the government.