Boots counts cost of recovery

PROFITS at High Street chemist Boots fell by by almost a quarter over the first half, but chief executive Richard Baker says customers are responding well to changes at the stores and the recovery is on track.

'The actions we have taken have impacted profit, but are necessary to deliver a sustainable long-term return for shareholders,' he said.

Pre-tax profits tumbled by 23.6% to £205.5m, in line with analysts' expectations, but there were also exceptional costs of more than £50m, covering the cost of its exit from dentistry, chiropody and laser eye treatment. Boots is retaining its opticians operation but today's figures showed profits there had fallen by almost two-thirds to just £1.5m.

The group, which recently created a stir with news that it is considering launching a range of Durex sex aids in an effort to boost sales, had warned that sales growth slowed to 3.8% in the first half and that margins had also taken a knock. They fell by 180 points, while costs were higher than expected, rising by 11% against expectations of 6% for the full year.

More customers are coming to the stores, Baker said, although there was a

0.3% fall in average transaction value to £8.57. Longer opening hours had pushed turnover ahead by around 1%.

Toiletries sales were ahead by 1.7% despite the 'Lower Prices You'll Love' campaign cutting average prices by around 12%.