Retail sales at Boots, the leading beauty products retailer in the UK, have seen a decline in the first quarter of this year, according to Walgreens Boots Alliance, the multinational corporation that owns the company. Adjusted gross profit has dropped by 3.6% due to lower retail sales and margins in the UK operation. This decline is part of the wider struggles faced by the international retail division, including Boots, from September to November 2019. Although Boots continues to hold the top position in the beauty products market in Britain, its comparable sales have fallen by 3% on a currency-neutral basis in the quarter. Despite operating in a declining market, the company has managed to maintain its market share. The total sales for the international retail division have also decreased by 2.7%, totaling $2.7 billion (£2.1 billion).
However, there is some positive news for Boots as it reports double-digit growth in online sales. During the previous financial year, the company saw a nearly 15% increase in e-sales. Over the Black Friday weekend, record online sales were achieved in the UK with a 25% rise. Despite these positive developments, analysts have expressed disappointment with the overall results. Kate Ormrod from GlobalData points out that Boots’ quarterly trading performance consistently falls short, and there are no signs of improvement as the company continues its strategic overhaul. As part of this overhaul, 28 branches have already been closed, out of the planned 200 closures, and 26 beauty halls have been revamped. The product offerings in 200 stores have also been rebalanced. However, Ormrod believes that greater efforts are necessary to bring about faster change, considering the company’s extensive portfolio.
Ormrod also suggests that Boots can take advantage of its competitors’ weaknesses to attract premium shoppers. As rivals Debenhams and House of Fraser retrench their operations, Boots can appeal to high-end consumers with its product offerings, which are more aligned with their preferences compared to Superdrug, its closest rival. In order to regain its competitive edge in the market, Boots must adapt to the changing retail landscape and take strategic actions.