Boots restructuring to cost 2,250 jobs

The health and beauty retailer holds stock at 17 locations across the UK. Once its three-year plan is complete, a fully automated factory in Nottingham will replace the countrywide network, meaning that fewer staff will be needed.

The revamp will cost £120m, a large chunk of which will be spent in Nottingham.

The chief executive, Richard Baker, while lamenting the cuts, noted that the affected staff have been given three years' notice. Boots employs 45,000 full-time staff.

The retailer is investing £70m in 700 of its smaller chemists dotted around the country to try to improve its service and boost sales in local communities. Mr Baker said: "Our small stores have been underinvested and are important to the communities they serve. It is appropriate that we invest in these stores to provide the pharmacy-led healthcare role that we, and the Government, envisage."

The money for the investment will come from the proceeds Boots held back from the £1.9bn sale of Boots Healthcare International. It has returned £1.4bn of this to shareholders.

The retailer ismerging with the drugs distributor Alliance UniChem ina £7bn deal that will create a pan-European outfit. Boots, which has 1,400 stores in the UK and has faced criticism from consumers about the price of its goods, expects that once combined with Alliance, it will be able to buy drugs at much lower prices, cutting costs to consumers.

Shares in Boots, which is on course to make profits of about £380m this year, rose 22p yesterday to 735p.