Sturdy Boots battles supermarkets

THE back-to-basics drive of new Boots chief executive Richard Baker has triggered another strong quarter of sales growth at the retailer whose market share was under threat from the likes of Tesco, Asda and Superdrug.

In what is now its eighth successive quarter of like-for-like sales growth, the group's main Boots the Chemists division beat City expectations with a 4.4% jump on sales levels in the first three months of the financial year.

The figures will be taken as a further mark of success for Baker, formerly of Asda. He has axed most of the complicated promotions championed by his predecessor Steve Russell and focused on simpler deals.

Baker said: 'When I first walked around the store I counted 30 different types of offers in store. Now we have just seven. They're simple and they work.'

Also, about 3000 product lines have been dropped in price by an average of 16%. This has hit profit margins, which Boots expect to be 1% down this year before stabilising next year.

Sales are likely to suffer in the next 10 weeks, however, as the company uses the quiet summer period to bring in a host of store upgrades.

The only blackspot on the shopfloor has been photo-processing, where Boots has been hit by the explosion in digital photography. Baker said he remained committed to the old 35mm technology, but was introducing self-service digital processing machines across the chain.

Meanwhile, in the pharmacy department, where dispensing sales were up 7.3% in the quarter, Boots has focused on speeding up the service to customers.

Baker is in the middle of a major restructuring at the group that will see some 2700 head office and manufacturing jobs go by 2005.

He is cutting costs and has pledged to return £700 million to shareholders who have suffered dismal performances in recent years.