Baker on move to put the kick back in Boots

NEW boss Richard Baker moved swiftly to get to grips with the problems at struggling chemist chain Boots. In less than 10 months as chief executive, the former Asda man has administered his own unique form of tough love.

He has made a clean sweep of the boardroom and head office and has applied the financial rigour and discipline needed to put it back on the straight and narrow.

Analysts say he has also brought a deeper understanding of its core customer base and ushered in a return to old-fashioned retailing values such as good service.

He is spending nearly £400m to reverse decades of neglect at the company's 1,400 chemists. He is also taking on Tesco and Asda with the company's Lower Prices You'll Love campaign.

Stuart Rose, hoping to pull off a transformation at Marks & Spencer, might pick up some tips from Baker, whose measures already show signs of working.

But any thoughts of penning a 'how to' book on reviving a flagging retail icon should be put on hold for the time being, according to City analysts who reckon that Boots still has a lot to prove.

Sales at the chemist chain, which accounts for 85% of profits, grew by a better-than-expected 4.4% in the first quarter. There was even a sweetener for long-suffering investors who will benefit from a £700m share buyback planned for the next two years.

In his short reign so far, Baker has pushed through innovations such as a prescription collection service, which boosted healthcare turnover by 6.3% in the past quarter. He has also signed up Jonny Wilkinson, John Travolta and Kelly Brook for endorsement deals to pep up toiletry and hair care sales.

'We remain committed to making our stores modern, competitive and efficient,' Baker said.

But Nick Bubb, retail analyst at broker Evolution, points out that the group may be vulnerable to snafu's as it invests in updating its systems.

Executives themselves are only too aware that the fledgling recovery could all go awry. The group's aged IT system needs overhauling, its logistics are still shaky and there remain hundreds more store facelifts to perform.

Then there is the small matter of the supermarkets which have captured 45% of the health and beauty market. They have squeezed the small independent operators which have seen their market share drop to 2.3% from 6.4% in five years. Now they are after Boots.

'We are one-quarter of the way into into a three-to-five-year programme so there still some distance to go,' said one Boots insider of the challenges ahead.

As Sainsbury and Marks & Spencer have found to their peril, any sign of failure will be jumped on immediately. Baker's fan club insists that he will not tolerate the complacency which has dragged other retailers down.

He is constantly heard telling middle managers at the company's Nottingham base, where he has cut 100 jobs, that 'there are no tills at head office' - pointedly reminding them that unlike staff on the shop floor, they do not bring in any money. He has also started to devolve much more power to store managers.

His dislike of bureaucracy means further jobs cuts at the company's HQ are on the cards. The company wants to get the staff there down to 1,500 - half its current size.

In a six-week tour of the stores, Baker experienced at first hand the frustration of customers attempting to navigate the cluttered aisles.

After his epic journey, he declared that he could see opportunities to speed up change.

But the jury is still out on whether Baker really has the right prescription for Boots - or whether it will remain one of the sick men of British retailing.

He Asda be right choice

IT cost Boots a cool £640,000 to sign on chief executive Richard Baker - and that was before the new boss even got his feet under the boardroom table.

But chairman Sir Nigel Rudd reckons the company got a bargain when it poached the youthful executive from supermarket chain Asda.

Quizzed at yesterday's annual meeting about the cost of the transfer, Rudd told investors: 'You have to have the very best people running the business and they tend to be in secure jobs.'To tempt Baker, Boots agreed to buy out his £400,000 options packages and has honoured a £244,000 bonus.

It has also given him a salary package of £650,000 and the chance to earn half as much again in performance-related pay.

But then Cambridge-educated Baker, 41, comes highly recommended. He started at Rover and moved to Mars in 1986. In the early 1990s he joined Asda to work with chairman Archie Norman and chief executive Allan Leighton, rising to become chief operating officer.

During his nine years there, the Leeds-based retailer grew from a struggling regional operator to the UK's second-largest food store chain valued at £6.7bn when Wal-Mart bought it in 1999.

Analysts describe Baker as good communicator and clever marketeer - attributes he will need in spades at Boots. 'He is a doer, gets on with job and never over-promises,' said one retail sector expert.