Boots reports growth in quarterly sales

Boots The Chemists has reported that quarterly sales have grown an estimated 4.6% in total, in the seventh consecutive quarter of "good growth".

However, the company said that the business needed a period of "significant investment" in the short term to improve its competitiveness, efficiency and bring it up to date with modern retail practice.

Sales grew well in all areas – particularly in sales of cosmetics and fragrance, especially around Valentine's Day - and food sales returned to growth following the re-launch of the Shapers healthy eating range, Boots said.

Richard Baker, Chief Executive, commented: "Boots The Chemists faces substantial challenges in an increasingly competitive marketplace. There has been considerable, prolonged under-investment in stores and systems; the business has been slow to respond to the general trend towards more convenient opening hours and it still has untapped potential to build its presence in out of town locations. And value will continue to be an important point of competition with the supermarkets and high street competitors.

"In order to deliver sustained sales and profit growth in the future there is a need for a substantial increase in investment to create the modern, efficient and competitive retailer that Boots The Chemists needs to become."

Sixty new stores are planned in 2004/05, including a doubling of the rate of opening of edge of town stores. Plans to create a 'store-friendly' supply chain are on track and will continue over the next year, and necessary improvements to IT systems are under way, through the Backbone programme, the company said.

The revenue cost in 2004/05 for the package of changes to the business is expected to be approximately £140 million – £90 million for modernisation and £50 million for improving efficiency.

(gmcg)