Boots could close stores as sales dip, inks deal to sponsor women's football
today Apr 3, 2019
The American owner of the UK’s Boots health & beauty chain said the company needs to close stores and cut more costs after the “most difficult” quarter it has seen in its five-year history as a mutinational group.
Walgreens Boots Alliance (WBA) has already started taking “decisive steps” on UK cost cuts and is currently reviewing its physical store estate that comprises almost 2,500 locations. While some of those are large, experiential beauty playgrounds, too many others are small, local stores with major competition from rivals such as Superdrug and from large supermarkets selling similar core products.
However, any review also needs to take into account the fact that even the smallest stores are major click & collect hubs that support the firm’s online business. The company said it’s looking at the weakest performers and sees “opportunities for consolidation”. This follows an announcement in February that 350 jobs are at risk in its Nottingham HQ in another cost-cutting drive.
Boots remains the most popular place for consumers to buy health & beauty products in the UK, but it’s losing ground as nimble rivals like discount supermarket Aldi and online giant Amazon grab market share.
How many stores could close? We don’t know yet, although the company said it doesn’t see the closures as a major programme. It also said it hasn’t acted fast enough in the past and it plans to accelerate its investment in digital.
In its latest quarter (the period to the end of February), WBA said it saw a 2.3% drop in like-for-like UK retail sales. Trading was also tough in the US and the company issued a profit warning. It expects underlying profits to be flat rather than up 7% to 12% as previously predicted. The firm’s global underlying net earnings fell 14.3% to £1.919 billion in Q2, even though sales rose 4.6%, but the UK wasn’t the worst performer with its earnings down ‘only’ 8.9%, or 1.2% currency-neutral.
In more positive news, the company has also signed a deal to to sponsor the England, Scotland, Wales, Northern Ireland and Republic of Ireland women’s football teams. The three-year deal will be the first time that any brand/retailer has sponsored all five FA women’s national teams.
Women’s football is seen as an increasingly attractive sponsorship target and the Boots deal will see the retailer taking advantage of a wide range of sponsorship opportunities. As well as match-day ads and pitch-side branding, there will be other outdoor ads, social, content and PR, plus in-store activations.
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