Shop closures hit Lloyds Chemists

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Problems in its loss-making drugstores division sent shares in Lloyds Chemists crashing 48p to 237p yesterday after the company said it would be closing 100 shops and transferring others to different formats. The closures will result in several hundred job losses and a provision in Lloyds accounts which the company has yet to quantify.

Lloyds has 308 Supersave drugstores but is transferring 180 to a new format, Lloyds Health and Beauty, and re-branding a further 30 as Holland & Barratt, the Lloyds health foods subsidiary. The remaining 100 shops will be closed.

The company blamed changing buying patterns for the drugstores' problems. Director Michael Ward said more people were buying their household goods and toiletries in supermarkets and specialist beauty stores. "The market at the bottom end is no longer there."

The announcement comes just two months after Lloyds issued a cautiously optimistic Christmas trading statement, that caused the shares to rise to 304p. Even then the performance at the drugstores was described as flat.

Yesterday the company announced interim results for the six months to December, which showed that pre-tax profit had edged 1.4 per cent ahead to £26.6m. Sales rose by almost 20 per cent to £550m.

The chemist division saw sales increase by 5.9 per cent with like-for- like sales up nearly 4 per cent. Fifteen new shops were added, making a total of 912.

Holland & Barratt was the star performer, with growth in sales and profits of 19.8 per cent, helped by 21 new stores.

The drugstores made a loss during the period on sales that declined from £48.3m to £47.7m. Sales in the pharmaceuticals division increased.

The company said trading in the second half had started well with group sales up 19.3 per cent.

Gareth Davies, chairman of the engineering group Glynwed has joined the company has a non-executive director.

The dividend has been raised from 2.7p to 2.9p.