Failed venture costs Boots and Sainsbury £10m

Boots and J Sainsbury are to write off almost £10m after confirming yesterday that they are pulling the plug on their nine-store health and beauty trial. The two companies said they had been "unable to agree commercial terms for a roll-out".

The demise of the scheme, revealed in The Independent yesterday, marks the end of a 16-month joint venture which saw Boots operate the health and beauty offer within Sainsbury's supermarkets. At one stage the venture was even seen as a step towards a possible merger of the two retail giants.

Boots and Sainsbury's invested a total of £8m in developing the trial and will spend another £1m to £2m to revert the stores back to normal. Both companies tried to put a put a positive spin on the scheme's failure. But one analyst said: "The most important thing to come out of this is that Boots is not going to eliminate a competitor from the market."

Sainsbury's will now press ahead with its plans for a new health and beauty range that it has been testing in five stores for a year. This will include own-label products as well as ranges from brands such as Clarins and Clinique as well as Tub Thumpers and Hello Kitty.

The supermarket said it had already added 1,500 extra health and beauty products to its ranges over the past year.

Sir Peter Davis, the chief executive, said: "The five trial stores have seen significant sales increases which show that we can create sufficient value by operating our own extended health and beauty department."

Boots said it would accelerate its plans for more stores on the edge of town, planning to double the number from 77 to more than 150 within three years.

Both companies have had more pressing concerns than their joint venture. J Sainsbury's is embroiled in the bid battle for Safeway. Boots is seeking a new chief executive and a replacement for its chairman, who is retiring.