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‘Favourable timing’ of NHS reimbursement helps mitigate pandemic impact on Boots


By Isabel Shaw

19 Oct 2020

Boots UK pharmacy sales increased 0.4% on ‘a constant currency basis’ in the three months to August, reflecting ‘favourable timing on NHS reimbursement’, its parent company has reported.

Walgreen Boots Alliance said the timing of NHS reimbursement changes had mitigated the impact of lower prescription volumes and the reduced demand for pharmacy services during Covid-19.

From 1 June, the medicines margin for reimbursement increased by £15m per month, following discussions with the Department of Health and Social Care and initial margin survey data.

Drop in retail sales

According to the company’s latest fiscal report, its international retail pharmacy division as a whole had fourth-quarter sales of $2.3bn – a 15% decrease on last year’s figures – which it said was ‘mainly due to a 16.7% decrease in Boots UK sales’.

Comparable retail sales in Boots UK stores dropped almost 30% over the same period, which the company put down to a significant reduction in footfall during the pandemic, particularly ‘in major high street, train station and airport locations’. Footfall had, however, improved ‘steadily’ in the fourth quarter compared with the third, it added.

Adjusted gross profit for Boots also dropped a quarter (26%) compared with the same period last year, the report found, which Walgreens said reflected ‘the lower UK retail sales’.

Meanwhile, sales growth for Boots.com accelerated 155% compared with the year-ago quarter and this had partially helped to offset the reduced footfall, the company said.

‘Accelerate Boots UK turn-around’

The fall in sales has prompted the US parent company to ‘accelerate the Boots UK turn-around’ over the next year. 

Executive Vice Chairman and CEO Stefano Pessina – who is due to step down – said: ‘I am pleased to report results that came in at the high end of our expectations as we continue to adapt and transform our business model to changing customer needs.

‘Despite uncertainty amid the global Covid-19 pandemic, we are seeing a gradual improvement in key US and UK markets and continued strong performance in our wholesale business. I’m also encouraged by the accelerating growth in our e-commerce platforms.’

Boots has announced a raft of stores closures and job cuts in recent years – in June 2019, it confirmed that 200 UK branches would close over the next 18 months. Last month, the multiple announced plans to cut 4,000 jobs, after retail sales fell by almost half during the Covid-19 pandemic.

The retail giant continues to operate nearly 2,500 stores across the UK and employs around 54,000 staff – of which 6,350 are registered pharmacists.


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