Britain's leading health and beauty retailer Boots announced a small rise in annual profit today and unveiled a new store format to increase its share of the premium end of the cosmetics market.
Boots said pre-tax profit rose 1.8 per cent during the year to £581 million sterling against analysts forecasts of £560-595 million. The total dividend was raised 4.4 per cent to 26.3p.
Chief executive Mr Steve Russell said health and beauty sales will move ahead and margin improvement will continue. "We are confident of the outcome for the year and expect that the pattern of profit improvement wil favour the second half," Mr Russell said.
Boots has a 25 per cent share of the health and beauty market but supermarkets are muscling in.
A new store format called Pure Beauty will concentrate on this market, the company said. Initially it plans to open eight stores but sees scope for 65.
Boots aims to grow the premium end of the £3 billion sterling UK beauty and toiletries market as well as increasing its own market share by 5 per cent.
Boots is concentrating on premium brands rather than run-of-the-mill toiletries. It is also transforming itself with a move into wellbeing services such as dentistry, chiropody, nail bars, opticians, health clubs and reflexology.
Boots UK and Ireland will bring together Boots the Chemists (BTC), Boots Opticians, Boots Dentalcare, Boots Hearingcare and Health & Beauty Experience stores in a single fully integrated organisation.
Since the end of last year the shares have fallen 5.4 per cent and closed at 576p yesterday. They are trading on a rating of 12.7 times forward earnings - below the sector average of 16. The stock has underperformed peers by 15 per cent in the last six months.