Boots has revealed that despite sales drops across the UK retail outlets, they have managed to keep their heads above water through increased demand of their beauty and toiletry products.
Despite the recent cold weather and increase in flu-like-illnesses, the winter was relatively mild, resulting in a decrease in prescription drug sales during that period. Alliance Boots have plenty of other facets to their company however and this has resulted in an overall 5.2 percent rise in profits to £750 million, across the 2,500 UK stores.
This was largely down to the store’s exclusive range of Champneys bath products following its launch last year. Overall revenues in that area reached £2.15 billion, a two percent increase.
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Mild winters are becoming a recurring theme in recent years, and this is just one reason why Alliance Boots’ Executive Chairman, Stefano Pessina remains grounded about the store’s future prospects.
"In the coming year, we expect the economic environment to remain difficult with continuing pressure on both consumer and governmental expenditure. This will generate both challenges and new opportunities for us."
2010’s winter must have been milder still, as the most recent one still saw a 1.9 percent rise in like-for-like sales, selling 224 million items. However, all these increases have had to be put up against reimbursement rate reductions set by the Government.
New rivals in the industry, previously unheard of among pharmaceutical circles, have also muddied the waters in theory. Branded medicines have lost patent protection in some cases to these new, cheaper competitors.
Beauty and toiletry products really did hold the Boots fort down on their own, with the health sector also coming under increased pressure over the last year. Revenues in this area decreased 2.4 percent to £891 million – again as a consequence of less winter illnesses, and stronger competition.
One more shining ray of light in what was, overall, a positive set of statistics for Alliance Boots though, saw the pharmaceutical wholesale division’s revenues shoot up too. It currently supplies medicine to over 160,000 pharmacies, doctors, health centers and hospitals across 21 countries, and saw like-for-like revenues rise2.4 percent (27.9 percent overall). Across the whole group, profits rose 10.2 percent to £693.