Boots beats sales targets

RETAILER Boots, which is transforming itself from a chemist group to a holistic healthcare specialist, delivered better-than-expected sales figures for autumn and Christmas.

The numbers were boosted by surging demand for designer cosmetics and gift sets of make-up and bath products.

Chief executive Steve Russell declared himself disappointed with the rate of growth, however, and brokers took him at his word, marking the shares 1p lower to 600p. 'The overall result is not at a level with which we can be satisfied,' said Russell.

Group sales excluding the impact of new space grew 2.4% in the three months to 31 December. The core Boots the Chemist chain produced underlying sales growth of 2.2% within which health and beauty takings rose 4.4%.

The sales numbers compared with predictions of flat growth for the group but Boots told analysts not to upgrade their annual profit forecasts, implying that takings had been boosted by lower profit margins. FCUK men's toiletries delivered the most spectacular growth, as sales rose more than 60%. Gift set sales were up more than 30% and takings from top quality make-up rose 22%.

Boots is trialling stand-alone operations within Sainsbury's supermarkets and says initial results from six stores are encouraging. The division will be widely rolled-out if it continues to be successful. Dentalcare and chiropody on offer within Boots stores showed good growth and laser eye surgery at Boots Opticians proved appealing.

Over-the-counter medicines have been flying out of the stores since the new year, as flu epidemics have begun to spread across the country. Boots' overseas operations have been less successful and third-quarter like-for-like sales fell 2.1%.

Meanwhile, Body Shop posted like-for-like sales growth of 4% in its British stores over the five weeks to 5 January. The improved performance at home was offset by poor US results. For the 44 weeks to 5 January underlying sales were down 2%.

Chief executive Patrick Gournay said the figures are on an improving trend, boosted by the new food-inspired range. Margins are also rising. Takeover talks, revealed last October, are continuing and further news is promised 'in due course'. Suitors are thought to include private equity firms Paribas Affaires Industrielles and Texas Pacific.

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