Boots Defends Resale Price Maintenance

Lord Blyth, chief executive, warned that the abandonment of RPM referred to the restrictive practices court would lead to many closures among community pharmacies. He said only three per cent of retail revenues would be affected at Boots the Chemist, Britains biggest pharmacy chain.

However, ABN Amro Hoare Govett said it believed at least 13 per cent of Boots the Chemists sales could be affected. Although price competition would affect only some product ranges if RPM were abolished, the high growth margins could cause a disproportionate impact on profitability, the broker said Thursday.

Boots remarks came as it unveiled a nine per cent rise in half-year pre-tax profits, before exceptionals, from 218.7 million to 239.2 million. Turnover rose 12 per cent to 2.12 billion.

The results were heavily influenced by hectic corporate activity, which saw the sale of Childrens World for 62.5 million to Storehouse, the receipt of an initial 10 million payment from WH Smith for taking on its share of Do It All, a 300 million share buy-back, and the 115 million purchase of Laboratoires Lutsia.

There was also a rise in costs following the decision to test-market Boots the Chemists stores abroad. Pre-tax profits of 256 million included a 15 million profit from the Childrens World disposal. Net cash fell by 409 million to 116.9 million following the share buy-back.

Lord Blyth said the group had considered various retail acquisitions in the UK, but had concluded that the best strategy was one of organic growth. Sales at the Boots the Chemists chain rose 6.3 per cent and by 4.6 per cent on a like-for-like basis.

Profits rose 12 per cent to