Boots is riding heavily on the success of its new Battersea Power Station store
Boots pharmacy has more than 2,000 stores – but the one it's only that he opened at Battersea Power Station is literally just beautiful.
The counters with toothpaste and shower gel have disappeared. You also won't find paracetamol, wart cream or patches. Anyone searching for the internet's popular “food deal” is doomed to leave empty-handed and hungry.
A brilliant new store in Battersea spanning over 11,000 sq ft. ft, is the first Boots store dedicated exclusively to everything Britain's thriving £30 billion beauty industry has to offer.
Boots Beauty, as it has a figurative name, represents more than 250 of the most fashionable cosmetic brands; conducts beauty “master classes”; employs a small army of 35 beauty specialists; and offers various services, such as a hair salon that offers “scalp analysis” and in-house dermatologists that provide “skin scanning services.”
A lot depends on its success. City officials are abuzz with talk that Boots' US parent company has revived plans to sell the company, raising the prospect of a multi-billion-dollar sale or even a flotation of shares in one of Britain's biggest companies.
< p>It comes just weeks after Boots ditched its £4.8bn pension scheme, removing a major obstacle to any deal. “It's all clear now,” says pension expert John Ralph.
There is particular concern about the possibility of Boots returning to public hands after a 15-year hiatus, given widespread fears of a contraction in the London stock market. Some quarters are optimistic that the listing of such a high-profile retailer in the capital could provide a much-needed boost to British stock markets, despite fears they are being plunged into an irreversible spiral of decline.
But if Boots has any chance to bring sparkle back to UK equities, management must dispel lingering doubts about its prospects. New ventures such as the Battersea beauty center will be crucial if the company is to convince skeptics that its best days are just around the corner.
A decade and a half of uncaring ownership has left Boots with hundreds of dilapidated stores. Photo: Holly Adams/Getty Images Europe
The chain has been dogged by allegations of underinvestment. Critics say this is partly due to the need to pay billions of pounds in dividends after the company fell into the hands of private equity firm KKR and Italian billionaire Stefano Pessina in 2007.
Since then, payments have continued. Boots was taken over by US pharmaceutical giant Walgreens in a two-stage deal between 2012 and 2014. Walgreens is reported to have received more than £3 billion in payouts from its UK operations in 2022 alone.
A decade and a half of uncaring ownership has left hundreds of dilapidated stores here, many in the wrong locations. Its digital offering has long lagged behind its competitors. One Boots executive says that until recently some members of the management team believed the internet would become a “short-lived fad”.
One former director claims Boots has been suffering from a lack of investment ever since. turn of the millennium. “Now you have a dying and not growing business,” he says.
The boss of one of his biggest rivals mocks reports that Boots is worth £7 billion: “There's no way it's worth it.”
Some say its future is even more uncertain amid intense competition. Analyst Neil Saunders describes Boot as a “solid company” but little more.
“It's not a bad retailer. He has a good reputation. There are challenges – like all retailers – but the company has a fairly strong position in the UK. It's just not great, and it needs to be great to thrive in the current market. It faces intense pressure from supermarkets and Superdrug.”
Clive Black, an analyst at Shore Capital, says competition has increased “significantly” since Boots was taken private by private equity giant KKR in 2007.
“Twenty years ago there was no savings and housing transactions. . Now people who drive Audis and Mercedes are more excited to go out and buy their Procter & These places sell Gamble and Unilever products, and they're much cheaper,” says Black.
The latest threat comes from Sephora, the French cosmetics and skin-care brand owned by luxury goods giant LVMH. < /p>
“Sephora would be a real problem for Boots if it came to the UK,” says Black.
Boots boss Seb James admits , that he tried to disrupt the opening of the first Sephora store in the UK in the Westfield shopping center. Photo: Rii Schroer
Boots boss Seb James has admitted he tried to disrupt the opening of the company's first UK store at the Westfield shopping center in White City, west London. The company has plans to open a second store in Westfield Stratford, east London.
Boots insiders dismiss much of the criticism of the company as lazy and outdated. Dozens of the most outdated stores are closed, and another 300 are earmarked for destruction.
The money is being invested in a core complex of 400 large stores offering beauty and health products. Most can be found in city centers or retail parks, which are complemented by a network of hundreds of small local pharmacies and tourist shops.
Negotiations, which some major landlords describe as “aggressive”, mean that the vast majority of rents are now available for short-term letting, with some landlords agreeing to do deals for as little as £1 a year rather than risk vacating stores.
Boots' online offer is also getting better. Improvements to website speed and security, ease of ordering, payment and search functionality, and improvements in processing and delivery times have seen online transactions increase by almost a quarter over the past year. The Boots app now has 6.4 million active users.
Chiefs say the collapse of Debenhams has boosted sales, despite claims they were slow to capitalize on its disappearance from the high street. In October, the retailer reported market share gains for the tenth consecutive quarter.
Boots made pre-tax profits of £137m last year, up from £44.5m the year before, while turnover rose 10% to almost £10m. 7.8 billion
However, Boots' image as a retailer, left behind by competitors, will be difficult to shake. There are also expectations that the company will return to public markets, still saddled with some of the £9 billion of debt that KKR took on to finance its buyout in 2007.
One senior business figure warns: “If a company has a lot of debt, then they're going to be in big trouble, aren't they?”
Boots officials say the business is currently debt-free, although privately owned order acknowledges that Walgreens may find the ability to shift some of its own borrowings onto its UK subsidiary's balance sheet to be too difficult as the company struggles with its own financial difficulties.
Concerns over Walgreens' $12bn (£9.5bn) debt prompted Moody's to downgrade its credit rating by two notches to junk last week. The company's battered financial position has been further deteriorated by a US$7.4 billion liability in claims and settlements related to America's devastating opioid epidemic.
City leaders are quick to dismiss vague speculation about Boots – updated or not – as the savior of British shares.
“London is in a terrible state,” says one senior board member. “The stock market has a real problem, but it has nothing to do with the stock market. This is due to pools of capital that no longer exist because pension funds either don't want or are limited in buying shares.”
Veteran fund manager Richard Buxton says a relisting could provide a short-term boost, but that's about it. Togo. than this, because the reasons for the decline of British stock markets have deep and long-standing roots.
“This is not the answer. People can exclaim loudly and say, 'The markets are alive' and 'How wonderful!', but then we need to have a long conversation about what actually needs to be done to revive the stock market,” he says.
< p>“This implies a much higher level of required savings at source, channeled into equities. Companies prefer the US because it has a deep and liquid savings pool focused on stocks. In the UK we managed to gut that.”
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