High street beauty and pharmacy staple Boots – owned by Walgreens Boots Alliance Inc (NASDAQ:WBA) – has announced plans to axe 4,000 jobs and 48 stores nationwide as it attempts to mitigate the “significant impact” of the coronavirus pandemic.
The move is expected to affect around 7% of the company’s workforce, with staff at its Nottingham support office first on the line for redundancies. Deputy and assistant managers, beauty advisers and customer adviser roles across the UK’s 2,465 branches are also reportedly at risk.
A total of 48 stores are set to be shut, following a 72% dive in sales in Boots opticians and a 48% drop in Boots pharmacy stores during the peak of the pandemic. Despite being allowed to continue trading as a “non-essential retailer”, the record drop in consumer spending has nonetheless hit the Walgreens subsidiary hard.
With its profitable fragrance counters shut over hygiene concerns, and with more than 100 of its larger stores on the high street, stations and airports shut during the lockdown as employees were encouraged to work from home, Boots kept its doors open with limited services throughout the pandemic – recording a sore 84% drop in footfall across its UK stores in April.
The company also witnessed a drop in sales at its pharmacy counters, likely a reflection of a nationwide fall in GP appointments and hospital admissions as coronavirus patients understandably became the NHS’s main priority.
Nevertheless, the record surge in online shopping has boosted Boots’ quarterly performance, with the company noting a whopping 78% increase in online purchases during the lockdown. Like many of its high street cousins, the firm has announced that its digital success during the pandemic has inspired it to invest more into its online services in the future.
Commenting on Boots’ Thursday announcement, UK Managing Director Sebastian James stated:
“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.
“I am so very grateful to all our colleagues for their dedication during the last few challenging months. They have stepped forward to support their communities, our customers and the NHS during this time, and I am extremely proud to be serving alongside them.
“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”.
Investor insight
On the back of Boots’ disappointing news, the share price at parent company Walgreens Boots Alliance is expected to see a significant drop of around 4.42% to $40.42 ahead of Wall Street’s opening this afternoon. Last year, the firm recorded the worst annual performance in the Dow Jones Industrial Average of 2019.
