Good news from Alliance Boots - with a warning

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The Independent Online

Andy Hornby, the chief executive of Alliance Boots, yesterday said that the group’s 10.2 per cent revenue hike in the three months to the end of December was a “fantastic effort,” but warned that trading in 2010 would be tough.

The group, which is largely owned by US private equity firm Kohlberg Kravis Roberts (KKR), said that its retail division —Boots’ chemist shops on the high street — had seen revenues jump by 5.1 per cent in total, and 4.6 per cent on a like-for-like basis. The private company does not publish or disclose profit numbers.

Alliance Boots’ figures come after a bumper reporting season for the retail sector, with companies like Marks & Spencer, Tesco and J Sainsbury all reporting robust Christmas trading periods.

“The group’s financial position remains strong, reflecting a continuing focus on profit generation and working capital management and the benefits of low interest rates,” Mr Hornby, the former chief executive of the failed bank HBOS, said in a letter to Alliance Boots’ staff.

However, Mr Hornby also warned the 2010 would be a tough year for the company. The reintroduction of the 17.5 per cent VAT rate, the spectre of rising unemployment and public sector spending cuts are all likely to weigh on the high street over the coming year.

Regardless of economic concerns, Mr Hornby said he was confident that the group would meet its targets. The company does not disclose what the targets are, however.

Alliance Boots, which had been a member of the FTSE 100, was bought by KKR at the height the leverage finance binge in 2007, for a figure thought to be around £12bn.