Toiletry sales down at Boots

Related tags Cent Cosmetics Gross margin

Leading UK and international retailer Boots has reported that sales
for its mainstay toiletries division have fallen by 0.8 per cent
due to a price discounting strategy. The results reflect the
increasingly competitive retail environment for cosmetic products
in the most popular categories.

Popular toiletry lines have been subject to enormous competition, and of late that competition has manifested itself in intense discounting that is continuing to erode margins.

However, within the Beauty and toiletries division as a whole sales were up by 2.7 per cent, reflecting strong performances in a number of other areas that helped to counterbalance the poor performance in toiletries.

Bolstering the overall results for this category, Boots​ reported that sales of premium cosmetics and fragrances within the toiletries and beauty division were extremely positive, mainly due to the Christmas run-up. This pushed up fragrance sales by 9 per cent and premium cosmetics by 4.1 per cent.

For all sales, which includes the retailers lifestyle and health divisions, sales for the quarter increased by 4.2 per cent to £1.45 billion, reflecting a like-for-like growth of 2.6 per cent, mainly driven by the strong performance of cosmetics and fragrances as well as the baby category.

Although sales volumes were up, discounting hit like-for-like sales across all divisions, which led to deflation of 2.4 per cent, accounting for the impact on like-for-like sales results.

Boots CEO Richard Baker said the company has traded successfully by focusing its sales on value and availability, "We grew sales, maintained gross margins and built share in a highly competitive market."

"Although there remains much to do on our change programme and consumer spending across the high street is subdued, we are progressing well in making Boots more modern, competitive and efficient."

The retailer said that, reflecting the low consumer spend patterns affecting most major markets at the moment, it expected that spending would remain subdued in the third quarter. However, despite this, the company believes that it will still be able to meet current market expectations for the full year and even expects that gross margin percentage will be slightly higher than original estimates.

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