British retailer Boots warned on full-year profits today as sluggish consumer spending hit trading at its main chemists chain and cost cutting fell short of expectations.
Boots, which said in January that operating profit at the Boots The Chemist division was expected to be around £500 million (€727 million), said it was now likely to fall short of that mark as its market deteriorates.
"The company now expects full-year operating profits for Boots The Chemists to be in the range £465 million (€676 million) reflecting the poorer outlook and slightly higher operating costs," it said in a trading update.
Shares in the company took a sharp hit at the market open, falling 3.8 per cent 638-1/2 pence at 8:45am, valuing the company below £4.9 billion.
The announcement will come as a blow to investors hoping that the poor Christmas trading performance on the British high street did not mark the start of a protracted slowdown, and raised concerns that other retailers could follow suit.
Boots shares have underperformed the UK retail sector by around 17 per cent over the past 12 months as the company fights to fend off competition from supermarket giants like Tesco and Asda, which are moving into its traditional drugstore territory.
Boots said there had been no downturn in the number of customers and that gross profit margins had remained intact, but a hoped-for increase in the value of the average spend had not materialised.