Boots steps back from Far East with store closures

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The Independent Online

Boots confirmed yesterday it had rethought its overseas expansion strategy, favouring a policy of opening concessions in other retailers' shops rather than operating its own outlets.

The British healthcare and beauty chain said it had decided to close four of its 11 stores in Taiwan and 15 of its 67 shops in Thailand at a total cost of about £3m.

The announcement came as little surprise to the market since the chief executive, Steve Russell, had already indicated that the company's overseas expansion plans were under review.

The move also follows trials of the concession format or "implants" in Asia and Europe. Boots shares closed up 11p at 652p yesterday.

Mr Russell said: "The successful trials of this new business model give us the confidence to grow the BRI [Boots Retail International] business in Asia, and to progress partnerships in other markets."

In Taiwan, Boots said it would invest £2m in setting up Boots concessions in approximately 100 outlets of the Asian drugstore Watsons. The company, which already has three trial concessions in the Asian chain, said it would start the year-long process in March. It is also looking at extending the rollout into other Asian countries where Watsons has stores.

In Thailand, Boots said it planned to increase the number of concessions it has in the supermarket chain Tops from six to 20 by the end of this year. It said the 15 store closures there would take place over the coming six months.

"This ['implant'] model provides the potential for operating profit to be achieved within two years of trading in each new country. BRI's losses are expected to reduce significantly this year and again in the financial year 2002/2003," the company said.

Boots also said yesterday that the performance of its products in the chain of Etos shops in The Netherlands had performed "in line" with expectations.

In Italy, the company said that its trial in four Esselunga grocery stores continued to be "encouraging" and it said Esselunga would review the results of the trial over the next few months.

The new plan mimics a deal in the UK where Boots operates a number of concessions in outlets of the supermarket giant J Sainsbury.