Boots trading tough but beauty business promising
its third successive dip in quarterly sales, but said that
cosmetics and toiletry sales have continued to provide the company
with its strongest growth rates.
Like-for-like sales at the Boots the Chemists chain were down 1.6 per cent in the second quarter, with the company saying it sees "no sign that the market will get any easier for the rest of the year." Yet despite tough market conditions, the company's cosmetics and fragrance sales were up 7 per cent in the first half, while sales of toiletries were up 3 per cent. "The encouraging performance of our health and beauty businesses in a tough retail climate reflects our renewed focus and investment in these growing markets," said Boots chief executive officer Richard Baker. The company has recently invested in new beauty halls and self-selection merchandising units. It has also relaunched its No. 7 and 17 brands. "We are operating in a climate where consumers are under pressure and retailers are suffering as a result," said spokesperson Donal McCabe. "But we are working on building up our health and beauty businesses and have started to see the benefits of our investments," he told CosmeticsDesign-Europe.com. "We want to be the market experts for health and beauty, the place people naturally chose to come," he added. The company's beauty division currently accounts for around 40 per cent of its sales, with the healthcare division accounting for around 45 per cent. The bulk of the sales decline reported in the company's results was a result of a change in price rules on some prescription medicines, according to Baker, who said that without this, overall sales would have been broadly flat. Boots has enjoyed some success from its increased move towards premium brands, having recently signed a number of new contracts with brands representing this category. Toiletries, however, remain one of the biggest areas of challenge for the company, as European-wide, the market remains saturated and extremely competitive, with aggressive discounting driving margins constantly downwards. In a highly competitive UK retail environment Boots analysts and market experts generally consider that Boots has done well to maintain its current position. However, with competition in the beauty and toiletry categories showing no sign of abating, the rest of the year looks just as challenging for the retailer. External links to companies or organisations mentioned in thisstory: Boots
