Boots signals UK store closures and job cuts after shock profit warning

US-based owner has begun taking ‘decisive steps’ to cut costs, including reviewing its near-2,500 retail stores in Britain

The owner of retail chain Boots has warned of UK store closures as it looks to slash costs amid the “most difficult” quarter in the group’s history.

US-based Walgreens Boots Alliance said it had started taking “decisive steps” in Britain to cut costs, including reviewing its near-2,500 Boots retail stores.

The group revealed it is looking at poorly performing shops as well as “opportunities for consolidation”.

The company announced in February that 350 jobs are at risk in its Nottingham head office amid plans to trim HQ staff costs by 20 per cent.

Ways to overhaul its pharmacy business are also being considered.

The details come as owner Walgreens Boots Alliance reported a 2.3 per cent drop in like-for-like UK retail sales in its second quarter to 28 February, while comparable pharmacy sales dropped 1.5 per cent.

Tough trading in the US also saw the wider group deliver a warning about full-year earnings, with boss Stefano Pessina branding it the “most difficult quarter we have had since the formation of Walgreens Boots Alliance”.

The group is now expecting underlying earnings per share growth to be pretty flat in the current financial year, a hefty downgrade on its previous guidance of seven per cent to 12 per cent growth.

Global underlying net earnings slumped 14.3 per cent to $1.2bn (£920m) in the second quarter.

But sales rose 4.6 per cent, or 6.7 per cent with foreign exchange movements stripped out.

The international division, including the UK, saw second quarter earnings drop 8.9 per cent, or 1.2 per cent lower on a constant currency basis.

Mr Pessina admitted the group did not take action swiftly enough to offset challenging conditions.

But he outlined plans to turn around the company’s fortunes, including ramping up global cost-cutting targets by around another $500m to more than $1.5bn by 2022.

He also plans to make a number of senior hires to speed up efforts to boost the firm’s digital capability and transformation.

Mr Pessina said: “Our response was not rapid enough, given market conditions, resulting in a disappointing quarter that did not meet our expectations.”

He added: “We are going to be more aggressive in our response to these rapidly shifting trends.

“We are focusing on our operational strengths and addressing weaknesses.”

Walgreens Boots Alliance was formed in 2014 after the company bought the remaining 55 per cent stake it did not already own in the British and Swiss-based Alliance Boots.

PA