Boots is to cut 4,000 jobs – 7% of its workforce – as it closes 48 opticians outlets and sheds roles at its head office and stores.
The company, which has 2,465 stores, said it was accelerating a restructuring plan after sales at its main Boots outlets dived 72% and sales at Boots Opticians dived 48% during the high street lockdown imposed to prevent the spread of coronavirus.
As an essential retailer, Boots was allowed to continue to trade during lockdown, but the company said that more than 100 larger stores in city centres, stations and airports closed during the lockdown amid the shift to working from home.
The number of visitors to its other outlets also “dramatically reduced” as other nearby stores remained closed and its profitable beauty and fragrance counters stayed shut.
A reduction in visits to GPs during the lockdown also dampened demand for prescriptions at Boots’ pharmacies, with sales for that division down 1%. The company also admitted it had lost share to supermarkets as shoppers chose to visit less outlets during the pandemic.
Boots said online sales had soared 78% during the lockdown and it would be investing more into online and digital services in future. The company doubled capacity for home delivery during the lockdown partly by setting up small local fulfilment centres.
Sebastian James, the managing director of 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.
“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.”
The company said it was reducing the number of staff at its Nottingham head office by a fifth and would also be cutting some deputy and assistant manager, beauty adviser and customer service posts in its stores and opticians. Pharmacy jobs will not be affected.
Boots’s parent group Walgreen Boots Alliance said its UK retail arm had increased its annual cost savings target by about $200m (£158m) a year to $2bn in annual savings by 2022. The retailer is seeking rent reductions as well as cutting jobs.
US-based Walgreen slumped to an operating loss of $1.6bn in the three months to the end of May comparedwith operating income of $1.2bn in the same quarter a year ago, primarily due to one-off charges in Boots UK of $2bn. That comes after underlying profits at the company’s international division, of which Boots is a major part, dived 36.2%.
The company said it expected UK retail conditions “to remain very depressed, despite gradual easing of restrictions.”