The Investment Column: Boots card proves a major advantage
Friday 05 June 1998
This criticism aside, there's little doubt that the Advantage card has paid off. In just nine months Boots has issued 8 million of the cards, and over the year to March they accounted for 1.8 per cent of the growth in counter sales at Boots the Chemists. Apart from the profit that the card is generating, Boots also gets a wealth of information on spending patterns that it didn't have before.
The chemists chain remains the jewel in Boots' crown, producing like- for-like sales of more than 5 per cent. The Opticians branches, though a relatively small part of the group, stormed ahead with same store sales rising by a fifth. So it's not surprising to hear that the group is increasing its spending on the Opticians chains, while opening a further 30 superstores this year.
In other retail formats, however, success remains as elusive as ever. Halfords lifted like- for-like sales by just 3 per cent, although selling more own-brand goods helped boost profits by 28 per cent. Trading at DIY chain Do It All continued to be dull, with underlying sales up 6 per cent on a same-store basis. Ironically, the loyalty card has failed to catch on here and has been withdrawn.
Boots was keeping mum on reports that financial investors want to buy Do It All, though it would undoubtedly like to sell. However, Boots' growth - and its share price - will continue to depend on the performance of the chemists chain. On profit forecasts of pounds 620m the shares, up 28.5p to 984p yesterday, trade on a forward multiple of 21. Still good value.
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