Boots Group
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Image:Boots.svg Boots Group plc (Template:Lse), known as Boots, is the dominant pharmacy chain in the United Kingdom, with outlets in most high streets throughout the country. In recent years they have diversified their business from a traditional pharmacy to one offering one-hour photo-processing, opticians, and even home appliances in certain stores. In the 21st century Boots has faced increased competition from the main UK supermarkets, and it has struggled to grow.
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History
Boots was founded in Nottingham by John Boot in 1849 and transformed into a national chain by his son Jesse. Its current logo is based on a design made by one of Jesse's signwriters in the 1870s. The chain was established during that time, and for the first time they became official dispensing chemists, stocking prescription medicines. By the onset of the First World War there were over five hundred Boots shops. Boots now has almost one thousand five hundred stores including some stores overseas.
The company was until recently called The Boots Company and consisted of several subsidiary companies, such as Boots the Chemists Limited, which is the main retail chain. The parent company is now called Boots Group plc. The other main trading companies are Boots Healthcare International, which manufactures pharmaceuticals, Boots Opticians, and Boots Retail International. Originally with their own logos, all parts of the group (except Crookes Healthcare) now share the oval Boots logo. In 1982 the company opened a new manufacturing plant in Cramlington, Northumberland.
Since the appointment of a new Chief Executive from ASDA, the company has been given a refocus, inevitably leading to more outsourcing (such as Boots's own warehouses at its Head Office base in Nottingham - now owned by UNIPART) and job losses at Nottingham. In a break from tradition, Boots is reported to be preparing to lease out a main office building (vacant due to the level of staff losses) on its own private estate in Beeston, Nottinghamshire.
Boots until recently owned Halfords and once owned FADS, a home furnishings store and Do-It-All, a joint venture with W H Smith. Childrens world — similar to Mothercare — was another Boots company.
Expansion and diversification
In the 1990s Boots branched into dentistry, with a number of stores offering this service. Boots has also made a venture into "Wellbeing" services offering customers treatments ranging from facials, homeopathy, and nutritional advice to laser eye surgery and Botox (although the Botox service was short-lived). These ventures proved to be unprofitable. Boots Hearingcare was sold, and although it continues to trade at Boots, the service is owned by another Company. In late 2004 Boots also sold off the Dentistry, Footcare and Lasix eye surgery services to Optical Express who, like the Hearingcare, will continue to trade at Boots.
Boots has also diversified into the research and manufacturing of drugs. It developed ibuprofen, a painkiller and continues producing, trading and exporting its finished form (tablets, syrup etc.) in the UK and internationally, although manufacturing the bulk drug is now the activity of major pharmachemical operations in the USA, India and China.
Boots may well expand into the U.S. by supplying its popular ranges such as Botanics to department stores. Boots stores are starting to sell products not traditionally associated with Boots such as Dyson cleaners - under the name 'Offer of the Week'. These 'odd' items are bought in bulk and savings on High Street prices are passed onto the customer. Although many may see this as odd, Jesse's own customers were often presented with 'odd' items which Jesse purchased by buying in bulk and taking the first steps towards the strength of bulk buying. Jesse once filled the windows of his second Goosegate shop with sponges.
Advantage Card
The Advantage Card is the loyalty card of the Boots Group. It is billed as "the UK's most rewarding" loyalty card as it offers four points per pound spent. Each point is worth £0.01. Points can be exchanged for products, but only as whole payment, for example a card with 384 points on could buy a £3.79 product, but not a £3.99 product, even if the difference was offered in cash.
International
Since 1936, there have been Boots stores outside the UK. Stores in countries as widely spread as New Zealand, Canada (see Pharma Plus) and France were all closed in the 1980s. A new roll-out started in 1997 with The Netherlands, Thailand, Taiwan and Japan but only Thailand survives, as an independent chain.
Stores in Ireland have survived under the Boots company, with flagship stores on Dublin's Grafton Street, Dundrum, Limerick and various Cork locations. In other countries (including more recently USA, Switzerland and Hong Kong), Boots products are sold from instore 'implants' in department stores and other drugstores, such as Watson's
Financial performance
| Year ended | Turnover (£m) | Profit before tax (£m) | Net profit (£m) | Basic eps (p) |
|---|---|---|---|---|
| 31 March 2005 | 5,469.1 | 427.6 | 302.4 | 40.9 |
| 31 March 2004 | 5,325.0 | 579.9 | 411.5 | 52.8 |
| 31 March 2003 | 5,325.2 | 494.9 | 301.6 | 36.0 |
| 31 March 2002 | 5,328.3 | 595.8 | 404.3 | 45.9 |
| 31 March 2001 | 5,220.9 | 492.2 | 333.2 | 37.9 |
| 31 March 2000 | 5,187.0 | 561.7 | 399.0 | 45.0 |
(For those unfamiliar with British financial terminology, "turnover" is the equivalent of "sales" on a United States financial report.)
The Boots Estate
The Boots Estate features a range of listed buildings and staff enjoy a staff restaurant, coffee and snack shops, newsagent, branch of Boots and bank situated within beautifully landscaped grounds. The landscaped grounds include the Millennium Garden which features a herb garden (with some plants that Jesse used in his original herbal remedies) in the shape of a goose foot - harking back to Jesse's original shop on Goosegate in Nottingham. The Boots Museum is now closed (due to cost cutting) and historical items are in storage. The Head Offices are adorned with some interesting artefacts from old stores and feature two 'shops' where new displays and advertising are trialled. Over the summer months staff work hard to create Christmas displays in the second of the two shops hidden from view with only certain staff permitted access. The plans for Christmas - a major trading time for any retailer - start to take shape in September and late Summer as stores gradually move shelving and displays ready for the massive increase in products and stock. Stores are therefore in a state of flux for almost half the year, although the Company makes great efforts to keep disruption to a minimum to its customers and is very much focused on customer navigation of its stores. The Head Office site also features its own trial suite where new products are sampled and tested by consumers before the final decision is made to launch a product. However Boots also develops and produces a range of products for major names.
Merger with Alliance UniChem
On the October 1 2005, rumours began to spread that Boots and Alliance UniChem were planning to merge, although there had been no official announcement.
This was formally announced on the October 3 by the Chairman of the Boots Group, Sir Nigel Rudd. He said of the deal, "I believe that this merger does an awful lot for customers, for shareholders, and for indeed the employees".
The merger would create a chain of pharmacies with 17% of the UK market. Alliance Unichem's UK retail pharmacies are mainly "community pharmacies" located in small retail precincts in residential areas, whereas Boots shops are mostly on the main high streets of towns, cities and suburbs and in major shopping centres. Nonetheless it is speculated that the combined group may be required to divest some branches which are close to one another. The merger will also give Boots the major international presence which it has struggled to develop on its own.
The declining state of the retail industry in the UK has led to the merger and will help the company to face the competition given to it by supermarkets such as Tesco and ASDA that have entered the pharmaceutical market.
There has been speculation that private equity houses such as Permeira may make counter offers for Boots.
As of Monday, 3rd October 2005, the merger has been confirmed, and the new group will take on the name Alliance Boots. After the merger it will become Britain's dominant pharmaceutical retailer and wholesaler.
On 7 February 2006, the Office of Fair Trading decided not to refer the proposed acquisition by Boots Group PLC of Alliance UniChem Plc to the Competition Commission. This was due to the fact Boots agreed to sell 100 shops in local areas where there was a substantial lessening of competition. Boots will now operate 2,500 chamists across the United Kingdom.
Boots Healthcare International
In October 2005 Boots agreed to sell its over-the-counter medicines business, Boots Healthcare International, which markets brands such as Clearasil, Nurofen, Optrex, E45 and Strepsils, to the Anglo-Dutch household products company Reckitt Benckiser for £1.936 billion. Boots plans to use £1.43 billion of the sale proceeds to make a one-off special dividend payment, which will roughly equalise its market capitalisation with that of Alliance Unichem prior to the merger between the two groups. The remainder will be retained for investment.
The disposal was completed on 31 January 2006.