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Last Updated: Thursday, 12 January 2006, 09:37 GMT
Boots upbeat on Christmas sales
Boots store
Boots plans to merge with Alliance Unichem in a 7bn deal
Health and beauty retailer Boots has reported better-than-expected sales figures as it prepares to complete its merger with Alliance UniChem.

In the three months to December, like-for like sales at the chain - which has 1,400 outlets - fell 0.7%, against predictions of a 1.4% slide.

Boots said it bought less stock for Christmas at cheaper prices and managed to avoid unplanned price cuts.

Revamped stores and relaunched beauty products also helped to boost sales.

Beauty sales continued to perform strongly, achieving a 7% sales rise thanks in part to Boots' own-brand ranges such as No 7.

Total sales during the period rose 1%, while underlying like-for-like sales were up 0.3% after adjusting for the impact of regulatory price changes in drugs dispensing.

Online sales up

Boots' internet business, boots.com, performed strongly with sales up more than 40%, the company said.

There is nothing I see on the current horizon that is going to change conditions for consumers.
Richard Baker, chief executive

However, sales in toiletries were flat as supermarket operators increasingly enter the market and undercut Boots' prices.

And the decision to discontinue products such as TVs and other large electrical items meant sales in its lifestyle division were down 2%, while the decline in photography sales slowed to 5%.

But Boots said it was happy with the festive performance and that the firm had overcome the potential distraction of the UniChem merger.

'Good progress'

The merger will combine Boots's leading position on the UK High Street with Alliance's strong community chemist presence and European distribution network.

Boots is valued at 4.6bn and Alliance at 2.9bn.

But some industry analysts have criticised the plans on the grounds that it does not address the key problem of slow sales amid intense competition as supermarkets try to muscle in on its business by offering low-cost vitamins and toiletries.

"In a very active period for the group, it is pleasing that the core business has remained focused and made good progress," said chief executive Richard Baker.

But he remained cautious on the near-term prospects for the High Street.

"I think it will be a tough next three months," he said.

"People are going to see some big bills landing on their doormats. There is nothing I see on the current horizon that is going to change conditions for consumers.

"I think it's going to be quite a tough year."

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