Alliance Boots flags up slow UK growth

Alliance Boots has reported double-digit sales growth for the year but the UK market is sluggish as the pharmacist faces increased competition in the health and beauty market from Superdrug and supermarkets.

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Alliance, which owns the Boots brand in the UK, said revenue increased to £20.2 billion for the year to March 31 2011, while trading profit was £1.05bn, up 14% from the previous year.

Alliance’s pharmaceutical wholesale division, which operates mainly in Europe, increased local currency revenues by 26%. In the UK, like-for-like sales grew by only 1.2%.

Last month, Boots said it would launch a mobile platform to boost its digital operations and help it stay ahead of the supermarkets, which are extending their health and beauty offerings.

Superdrug, Boots’ main rival in the UK, is preparing to launch its first loyalty scheme later this year and is refreshing its store portfolio with a new fashion-inspired store concept.

The results come weeks after Alliance’s chief executive Andy Hornby resigned after less than two years in the job. Hornby, who was previously in charge of HBOS bank when it was rescued by Lloyds Banking Group, said he wanted to take a brief break from the corporate world.

Executive chairman, Stefano Pessina says: “In 2010/11 we have made great progress across the Group to accelerate our growth plans, including acquiring controlling interests in both Hedef Alliance and ANZAG, our Turkish and German associates.”

“Looking to the year ahead, we are planning for consumer demand to be subdued and expect governments to continue to seek ways to contain growth in healthcare expenditure. In spite of this, we are confident about our future prospects both in the short and longer term.”

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