The owner of retail chain Boots has warned over UK store closures as it looks to slash costs amid the “most difficult” quarter in the group’s history.
US-based Walgreens Boots Alliance said it had started taking “decisive steps” in the UK to cut costs, including reviewing its near-2,500 Boots retail stores.
The group revealed it is looking at poor performing shops as well “opportunities for consolidation”.
Our response was not rapid enough given market conditions, resulting in a disappointing quarter that did not meet our expectations.Stefano Pessina, Walgreen Boots Alliance boss
It follows the group’s announcement in February that 350 jobs are at risk in its Nottingham head office amid plans to trim HQ staff costs by 20%.
It is also looking at ways to overhaul its pharmacy business.
The details come as owner Walgreens Boots Alliance reported a 2.3% drop in like-for-like UK retail sales in its second quarter to February 28, while comparable pharmacy sales dropped 1.5%.
Tough trading in the US also saw the wider group warn over full-year earnings, with boss Stefano Pessina branding it the “most difficult quarter we have had since the formation of Walgreens Boots Alliance”.
The group is now expecting underlying earnings per share growth to be roughly flat in the current financial year, a hefty downgrade on its previous guidance of 7% to 12% growth.
Global underlying net earnings slumped 14.3% to 1.2 billion US dollars (£1919 million) in the second quarter.
But sales rose 4.6%, or 6.7% with foreign exchange movements stripped out.
The international division including the UK saw second quarter earnings drop 8.9%, or 1.2% lower on a constant currency basis.
Mr Pessina admitted the group did not take action swiftly enough to offset challenging conditions.
But he outlined plans to turn around it fortunes, including ramping up global cost cutting targets by around another 500 million US dollars (£383 million) to more than 1.5 billion US dollars (£1.1 billion) by 2022.
He also plans to make a number of senior hires to speed up efforts to boost its digital capability and transformation.
Mr Pessina said: “Our response was not rapid enough given market conditions, resulting in a disappointing quarter that did not meet our expectations.”
He added: “We are going to be more aggressive in our response to these rapidly shifting trends.
“We are focusing on our operational strengths and addressing weaknesses.”
Walgreens Boots Alliance was formed in 2014 after Walgreens bought the 55% stake in UK and Switzerland-based Alliance Boots that it did not already own.