Boots profits push above £1bn

High street giant Alliance Boots today pushed profits above £1 billion for the first time and mapped out future growth plans despite "challenging" conditions.

The pharmacist and wholesaler posted trading profits of £1.07 billion in the year to March 31 - up 12.7% on a year earlier - helped by launches such as No 7 Protect & Perfect skincare.

The firm expects consumer conditions across Europe to remain "subdued" but is banking on a series of tie-ups with other businesses to boost revenues.

Boots is poised to launch a new children's clothing range from Mothercare, and is trialling the sale of health and beauty products in selected Waitrose stores, with the supermarket's food sold in its own outlets.

Executive chairman Stefano Pessina said: "We are increasingly establishing strategic partnerships with other leading businesses to accelerate our development, both in the UK and other markets."

The company - which was taken private in an £11.1 billion takeover in 2007 - becomes the third UK retailer to post profits of more than £1 billion behind Tesco and Marks & Spencer.

The group employs 75,000 staff in the UK, with 2,500 health and beauty stores and 670 opticians.

The company posted total UK revenues of £6.6 billion, with like-for-like sales growth of 2.4%.

Andy Hornby - the former head of collapsed bank HBOS, who joined as chief executive last year - said: "This is a particularly good performance, given the challenging economic conditions we faced throughout the year."

The firm said own-brand health and beauty products such as No 7, Soltan and Botanics continued to drives sales as well as new skincare ranges such as Boots Aqua Balance.

Boots also completed the roll-out of its pharmacy rebranding as "your local Boots pharmacy" in December.

The firm said 1,000 stores had been converted to the format, lifting retail sales and dispensing volumes.

Boots - which completed the merger of its own opticians with Dollond & Aitchison last year - grew UK profits in every area of the business except lifestyle, due to a declining photographic market.

Boots also saw lower baby food sales last year due to strong competition from supermarkets.

Mr Pessina, who led the buyout of the business with private equity firm KKR in 2007, said the group had reduced its net debt by £645 million last year. This leaves the group with borrowings of £8.4 billion.