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Profits at UK pharmacy chain Boots soared last year, driven by beauty sales and more shoppers visiting its stores.
The retailer, owned by Walgreens Boots Alliance in the US, posted a 42.3 per cent jump in pre-tax profits to £237.6mn for the year to August 31, largely thanks to higher profit margins, according to new filings for three UK subsidiaries at Companies House.
Revenue rose to £8.3bn from £7.7bn, thanks to strong retail sales derived from brands such as Soap & Glory and Liz Earle as well as Fenty Beauty by singer Rihanna. Boots also paid out £107mn in dividends between subsidiaries and spent at least £38mn on restructuring costs, the documents showed, as it seeks to reduce the number of its stores from about 2,200 to 1,900.
The documents provide the fullest picture for the finances of Boots, which in November agreed to offload £4.8bn of pension obligations to insurer Legal & General in a deal that paves the way for a potential sale or a stock market listing of the chain.
Established by the Boots family, the retailer is the country’s largest health and beauty chain. Its early success was due to its high-quality products sold at affordable prices.
The Nottingham-headquartered business, which has been fully owned by Walgreens since 2014, has been the subject of speculation over its future ownership since Walgreens’ new chief executive Tim Wentworth said in January it was “evaluating all strategic options to drive sustainable long-term shareholder value”.
Walgreens previously abandoned plans to sell the 175-year-old company, saying that while there had been “significant interest”, the bids failed to reflect its potential value.
Some prospective acquirers were put off by the complications of a large defined benefit pension scheme, for which a new owner would have become responsible.
According to the Companies House filings, Boots will have to pay £786mn as part of the pension deal.
Boots has since posted a 5.9 per cent increase in retail sales for the three months to February 29, while pharmacy sales increased 1.7 per cent. Online sales via its website also continued to grow, up 16.8 per cent and representing more than 17 per cent of Boots total retail sales.
