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Thursday, 17 January, 2002, 10:33 GMT
Digital camera craze hurts Boots
A Boots outlet inside a Sainsbury's store
Boots is keen on alliances with supermarkets
Healthcare retailer Boots, hit by the growing of popularity digital cameras, has admitted disappointing trade in the run up to New Year.

Steve Russell, chief executive at the group, which also owns car hardware chain Halfords, said there were "encouraging" increases in sales in some divisions.

Christmas trading update - Thursday
Bhs: +7.8%
QS Group: +4.3%
Body Shop: +4.0% (UK only)
Budgens: +4.0%
Boots: +2.4% (group)
Clinton Cards: +1.5%

But he admitted that the "overall result is not at a level with which we can be satisfied".

Group like-for-like sales rose by 2.4% over the last three months of 2001.

A below average sales rise at Boots' pharmacy chain was blamed largely on a 9% trade slump in takings at photo operations "in a depressed market for processing and film, and reflecting the increased use of digital cameras".

Pictures taken by digital cameras, one of the most popular 2001 Christmas presents, are saved electronically and do not require the chemical processing needed by a traditional film.

Laser surgery boost

Mr Russell said that operations groupwide were progressing "strategic programmes" to boost revenue.

The firm is undertaking a 200m cost-cutting programme and has focused on high-margin spin-offs, such as health clubs and chiropody services to support profits.

Sales at dentalcare operations rose 38% over the three months, with footcare services seeing sales rise by a quarter.

A rise of 7% in takings at Boots Opticians units was credited to "strong demand" for laser surgery.

City reaction

Boots shares stood 1.5p higher at 602.5p in morning trade on Thursday.

The stock topped 1,000p in early 1999, falling below 500p early last year.

Boots recently became one of the first large UK companies to switch its employees pension fund out of stocks - perceived to be too risky - and entirely into bonds, a steadier though often less rewarding investment.

Other firms to order the switch have included department retailer James Beattie, which on Tuesday announced it had reduced the level of shares in its pension portfolio "in favour of bonds and gilts".

See also:

09 Jul 01 | Business
Boots joins forces with Sainsbury's
31 May 01 | Business
Boots' profits stall
16 May 01 | Business
Supermarkets slash medicine prices
08 Oct 00 | Business
Boots moves out-of-town
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