Walgreen Boots Alliance (WBA), the company behind Boots, has announced strong sales in the second quarter of fiscal 2023. Boots No7Total Boots retail sales experienced a remarkable 16% year-on-year growth, marking eight consecutive quarters of consistent growth. The surge in sales was primarily driven by increased demand for beauty products, particularly during the Christmas trading season, where sales for the five weeks leading up to December 31st rose by an impressive 17.4%.

Despite an exceptional sales growth, WBA reported a decline of 20.3% in earnings per share (EPS) for Q2, falling to $0.81. However, the company’s overall sales rose by 3.3% year-on-year, reaching $34.9 billion. In the first six months of fiscal 2023, sales reached $68.2 billion, reflecting a 0.9% increase compared to the previous year. On the flip side, the company reported an operating loss of $6 billion, in contrast to an operating income of $2.5 billion during the same period last year. The primary reason for this loss was a pre-tax charge of $6.8 billion due to opioid-related claims and litigation.

With regards to Boots, the company saw record-breaking sales in skincare during December, with three consecutive weeks of record sales. The demand for its own-brand No7 products, as well as labels like La Roche-Posay and CeraVe, contributed to its exceptional performance. Additionally, in-store footfall at Boots increased by 16% during the quarter, and online traffic remained strong, with Boots.com accounting for more than 15% of retail sales.

Sebastian James, Managing Director of Boots UK and Ireland, attributed the company’s success to its emphasis on value and its leading beauty offer, which helped attract more customers. He highlighted the strong sales performance and market share growth, particularly during the Christmas trading period. Tash Van Boxel, a retail analyst from GlobalData, praised Boots for its performance, pointing out that larger basket sizes and a focus on premium beauty and skincare products were significant factors driving its sales growth.

In order to sustain its momentum in the second half of fiscal 2023, Boots will need to continue promoting its value range and higher-priced beauty products. This strategy aims to encourage customers to either upgrade their purchases or opt for more affordable options, rather than turning to value retailers like Aldi and Savers. Despite its success, Boots faces competition from rivals such as Sephora, which recently opened its first UK store in 18 years at London’s Westfield mall. However, Boots has responded to this threat by revamping its Westfield store, demonstrating a proactive approach to retaining customers and minimizing the risk of losing them to Sephora.

Given the positive performance, Boots is well-positioned to attract potential buyers if it is put up for sale once again. With its focus on value and market-leading beauty offerings, the company remains a strong player in the beauty and health retail market.

Useful links:
1. Boots.com
2. GlobalData