Boots pays price for Wellbeing debacle as 500 jobs are axed

The high street retailer Boots is axing 500 jobs at its Nottingham head office as it seeks to cut costs and draw a line under its disastrous move into services such as Botox injections and aromatherapy.

The jobs will go in functions such as personnel, IT and finance over the course of this year. More redundancies will follow among the 3,000 workers at the Nottingham site, the company said, although it declined to give numbers.

The comments came as Boots reported a 17 per cent drop in full-year profits after a £123m loss on the disposal of the Halfords car accessories chain and a £34.5m loss on the withdrawal from the ill-starred Wellbeing Services venture. Anxious to draw a line under this foray, which lost a total of £64m last year, Boots said it was now focused on two core businesses, Boots the Chemists and Boots Healthcare International, which makes brands such as Nurofen and Strepsil.

John McGrath, the chairman, said the company had "cleared the stable out" ahead of the arrival of a new chief executive, Richard Baker, who joins on 15 September. He replaces Steve Russell, who left the business last week.

Boots the Chemists is improving with like-for-like sales up by 6.1 per cent in the second half and by 7.5 per cent in the third quarter, its best Christmas performance for a decade.

The fall in the number of transactions has stabilised after falling at 5 to 7 per cent for years. Product availability is now running at 98 per cent after problems a year ago which saw the figure drop to 90 per cent.

Mr McGrath, who hands over to Sir Nigel Rudd later this year, said Boots would increase the level of promotions to fight back against the major supermarkets.

Boots' full-year figures showed that pre-tax profits fell to £495m in the year to March from £596m the previous year. Boots the Chemists profits fell 6 per cent to £568m though the chain increased or held market share in all major health and beauty categories. Baby ranges also did well, helped by the Mini Mode clothing launch.

Boots Opticians business made flat profits of £8m. But the dental care and chiropody businesses, which are the only two of the Wellbeing services being retained, recorded a combined loss of £22m.

The company said it was on the lookout for new brands for Boots Healthcare International, which saw profits rise by 5 per cent to £70m.

The shares fell 13p to 609.5p yesterday.