£300m buyback surprise at Boots

HEALTH and beauty group Boots has surprised investors with a £300m share buyback programme, reducing the equity base by about 5%. The decision sent the shares higher but they later surrendered those gains, to end off 1 1/2p at 616p.

'After taking everything into account, we decided we still had the money to spare. Ours is a very cash-generative business,' said a spokesman.

Details of Boots' strategy for its stores will be unveiled in May. There is speculation that future profits may suffer as the company reverses years of under-investment in its retail division.

'At the moment, it has 1,400 inconvenience stores. I really don't understand why they are returning cash. Money needs to be spent on the chain,' said one analyst. Boots has admitted to stock problems, resulting in a lack of the right goods in the right places at the right time.