Boots UK accelerates transformation plan in response to COVID-19 impact
09 July 2020
Boots UK is taking decisive action to mitigate the significant impact that COVID-19 has had on the business and is accelerating the next phase of the Boots Transformation Plan. This will ensure a long-term and healthy future for the UK’s leading pharmacy, health and beauty business.
Boots remained open throughout the lockdown to provide communities with vital pharmacy and healthcare services. Boots colleagues showed dedication and care in delivering this service at a challenging time, helping customers and patients in communities across the UK.
However, footfall into Boots stores dramatically reduced, and its revenue-driving beauty and fragrance counters were closed. More than 100 larger stores in city centre, station and airport locations were closed, as were the majority of Boots Opticians practices. These factors severely impacted comparable retail sales, which decreased 48 per cent for Boots UK and 72 per cent for Boots Opticians in the third quarter (versus last year). Restrictions are beginning to lift, but with an uncertain economic outlook, it is anticipated that the high street will take considerable time to recover.
Boots has announced today the start of a consultation process for a significant restructuring across its head office, store teams and Opticians teams, resulting in a reduction of its headcount of more than 4,000 (7 per cent of the workforce), and the closure of 48 Boots Opticians stores.
As the further effects of the pandemic become known and macroeconomic conditions evolve, Boots will continue to review and progress its Transformation Plan.
COVID-19 has also accelerated the shift by consumers towards digital channels and online shopping. Boots responded quickly by investing in, and doubling, the capacity of Boots.com over the lockdown period.2 This action opened up more home delivery slots and drove a 78 per cent increase in Boots.com sales over the period.3 Additional actions included increasing the capacity of the free online repeat prescription deliveries, and the introduction of new online pharmacy and beauty services such as virtual consultations. The acceleration of the Transformation Plan will see continued investment into online and digital services as a key driver of growth for the business.
The Boots pharmacy business continues to serve at the heart of communities across the UK, and its patient and customer satisfaction scores are at the highest levels ever.4 With further continued investment in digital and online pharmacy and retail services, Boots will provide new ways for patients to receive even more access to its trusted pharmacy care and advice.
Sebastian James, Managing Director, Boots UK, said:
“The proposals announced today are decisive actions to accelerate our Transformation Plan, allow Boots to continue its vital role as part of the UK health system, and ensure profitable long-term growth. In doing this, we are building a stronger and more modern Boots for our customers, patients and colleagues.
I am so very grateful to all our colleagues for their dedication during the last few challenging months. They have stepped forward to support their communities, our customers and the NHS during this time, and I am extremely proud to be serving alongside them.
We recognise that today’s proposals will be very difficult for the remarkable people who make up the heart of our business, and we will do everything in our power to provide the fullest support during this time.”
Cautionary Note Regarding Forward-Looking Statements. All statements in this release that are not historical are forward-looking statements made pursuant to the safe harbour provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not guarantees of future performance and involve risks, assumptions and uncertainties, including, but not limited to those relating to whether Walgreens Boots Alliance, Inc. will achieve the objectives of its Transformational Cost Management Program, whether the costs and charges associated with restructuring initiatives will exceed current estimates and forecasts, the company’s ability to realize expected savings and benefits in the amounts and at the times anticipated, and outcomes of legal and regulatory matters, as well as those described in Item 1A (Risk Factors) of Walgreens Boots Alliance, Inc.’s Form 10-K for its fiscal year ending August 31, 2019 and Form 10-Q for its fiscal quarter ending February 29, 2020, and in other documents that Walgreens Boots Alliance, Inc. files or furnishes with the U.S. Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially. These forward-looking statements speak only as of the date they are made. Each of Walgreens Boots Alliance, Inc. and Boots UK do not undertake, and expressly disclaim, any duty or obligation to update publicly any forward-looking statement after the date of this release, whether as a result of new information, future events, changes in assumptions or otherwise.
Notes to editors
1 With the exception of some essential care and mobile teams which remained open to provide vital emergency services and care
2 Boots created 27 hybrid stores and 2 micro-fulfilment centres and also hired an additional 850 colleagues to support warehouse operations during lockdown to further increase capacity.
3 Q3 YOY growth of Boots.com. Source internal Boots sales data
4 Source: Boots Internal Customer Tracking metrics
- The vast majority of Boots stores were kept open throughout the lockdown to provide vital pharmacy and healthcare services to local communities across the UK despite the costs of keeping these stores running, and Boots was proud to support the nation and the NHS.
- The company has implemented a number of measures to mitigate the impact of COVID-19 and reduce the cost base, including the temporary closure of more than 100 larger stores in city centre, station and airport locations, furloughing more than 16,000 employees at the peak of the crisis, reducing store hours and closing non-essential counters, and seeking some rent reductions.
- Given the Government’s stay-at-home guidance at the height of the lockdown, footfall into Boots stores was dramatically reduced. This severely impacted the revenue generating parts of the business; retail sales and pharmacy services. G.P. visits were significantly down and therefore the demand for one-off prescriptions and medicines also reduced.
- The restructuring proposals will affect roles in Boots support office (in Nottingham), some Deputy and Assistant Manager, Beauty Advisor and Customer Advisor store roles, and Boots Opticians. Proportionally the proposed support office reductions are the greatest.
- We do not expect the proposals to impact our pharmacists or pharmacy advisors.
- Boots is committed to communicating honestly and openly with colleagues throughout this process and to provide all colleagues support through the transition including access to our Employee Assistance Programme (LifeWorks) as well as practical help through outplacement support.
About Boots UK
Boots UK (boots.com), the UK’s largest pharmacy-led health and beauty retailer, is part of the Retail Pharmacy International Division of Walgreens Boots Alliance, Inc. (Nasdaq: WBA), the first global pharmacy-led, health and wellbeing enterprise.
With 2,465* stores in the UK, its purpose is to champion everyone’s right to feel good. Boots UK is committed to providing exceptional customer and patient care, be the first choice for pharmacy and healthcare and offer innovative 'only at Boots' exclusive products such as No7, a leading UK skincare brand, Soap and Glory and Liz Earle.
Created 170 years ago, the Boots brand is still at the heart of the communities it serves.
*As of 31 August 2019, excluding equity method investments.