Boots posts uplifted sales as owner Walgreens shelves plans for £5.5bn auction
Boots has posted buoyant quarterly retail sales after its parent company abandoned plans to sell the chemist this week.
In third quarter results, Walgreens Boots Alliance (WBA) stated profit was down on last year but had surpassed Wall Street expectations.
The retail pharmacy giant posted adjusted earnings of $0.83bn or $0.96 per share for the period.
Boots UK said sales were boosted 24 per cent in the quarter with store footfall 45 per cent higher than the previous year.
Total sales grew by 13.5 per cent in the period, despite consumers pulling back from discretionary spending due to 40-year high inflation levels.
Website sales were more than double their pre-pandemic levels, making up 13 per cent of quarterly sales versus making up six per cent of sales before the pandemic.
Sebastian James, managing director of Boots said “The execution of our transformation programme and a sharp focus on expanding our key categories of healthcare and beauty, has driven strong sales and market share growth and further strengthened our position as the UK’s leading health and beauty retailer.”
In WBA’s results, chief executive officer, Rosalind Brewer, stated: “With our decision to conclude the Boots strategic review, I firmly believe that our strategic actions are working to deliver long-term shareholder value.”
A protracted auction process resulted in just one suitor making a binding offer for the chain, with potential bidders struggling to acquire financing for a deal.
A consortium of Apollo and Reliance Industries had lined up lenders to finance a significant part of the acquisition, while the Asda-owning billionaire Issa brothers had also reportedly struggled with financing.
WBA opted to retain ownership of Boots, with the firm citing “unexpected and dramatic change” felt by the global financial markets in the past few months.
WBA’s Brewer confirmed on Tuesday that the company had completed a “thorough review” of Boots and No7 Beauty Company, “with the outcome reflecting rapidly evolving and challenging financial market conditions beyond our control.”
It had hoped to sell the chain for £5.5bn.
Ornella Barra, one of the owners of Walgreens Boots Alliance, said earlier this year that an IPO had initially been eyed as a way to spin off the chain, before interest from takeover firms.
“At the beginning we had the idea of an IPO, but we didn’t start the process because the offers came in,’ she told the Daily Mail.
At the time, Barra refused to rule out an IPO for the firm, however, saying “everything is on the table.”
“If the offers (from private equity bidders) are not in line with our expectations we could come back to an IPO.”