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Boots Ireland books €2.4m property charge amid rising costs
Boots
booked a €2.4 million impairment charge against the value of its Irish property portfolio last year as a precaution against rising sales costs and overheads, as profit growth eased significantly from the previous year.
Operating profits at Boots Retail Ireland Ltd, the company behind the pharmacy chain's 95 stores in the Republic, increased 3.4 per cent to €39.8 million in the 12 months to the end of August last.
This was down from a 13.7 per cent surge in operating profits in the year to August 2023 and 13.6 per cent in the previous year as normal trading rhythms resumed following the Covid-19 pandemic.
In a report attached to the accounts, the directors said the small jump in operating profits was driven 'primarily' by stronger sales performance across its retail and pharmacy division.
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Revenues at Boots Ireland climbed 9.7 per cent to €580.6 million, more than €507.4 million of which, or 87.4 per cent, came from retail sales, which grew by 9.6 per cent due to online sales growth.
The remaining 12.6 per cent related to pharmacy sales, which jumped by 10.2 per cent in the year, mainly due to 'volume growth' relating to 'Government schemes' and rising demand for vaccination services, the directors said.
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Boots 'extremely remorseful' after pleading guilty over misleading Black Friday prices
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Rising sales were 'partially offset', according to the report, by a rise in administrative costs, which climbed more than 50 per cent to €12.3 million, and distribution costs, which jumped 8 per cent to €229,625.
Boots paid out €69.5 million in wages and salaries to its 1,668 staff in the Republic, up by around 6.8 per cent in the year.
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The directors said that as part of an annual review of its store portfolio, the company had concluded that a €2.4 million impairment charge was required for the year.
The 'cost-of-living crisis' did not have a 'significant impact' on the business in the financial year, they said, but had led to an 'increase in cost of sales and operational overheads'.
The Irish company, which opened also paid a €29.9 million dividend to its parent, Walgreens Boots Alliance, down from €48.8 million last year.
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Boots owner to be taken private in €22bn deal
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Earlier this year, Walgreens Boots Alliance was taken private in a $23.7 billion (€21.8 billion) deal with private equity group Sycamore Partners, which will end the struggling pharmacy chain's century-long run as a public company later this year.
Sycamore agreed to pay $11.45 a share to take Walgreens private, valuing its stock at a nearly 30 per cent premium to before deal talks were first reported in December and giving it an equity value of about $10 billion, the pharmacy chain said on Thursday.
Sycamore is likely to hold on to the US retail business and sell or spin off the remainder, which includes the UK pharmacy chain
Boots
, as part of a three-way split, the Financial Times previously reported.
As part of the deal, Italian billionaire Stefano Pessina, Walgreens' executive chair and largest shareholder, will maintain a sizeable minority shareholding in the business.
Last month,
Boots
pleaded guilty in Dublin District Court to breaching legislation aimed at protecting consumers from misleading prices during sales periods following an investigation by the consumer watchdog.
The breach identified by the Competition and Consumer Protection Commission (CCPC) was said to have occurred in the 2023/24 winter sales season, a period which covered the Black Friday and Cyber Monday sales windows.
