UK health and beauty retailer Boots will reveal a slump in third-quarter profits later this week, in a move which threatens to jeopardize its GBP6 billion deal to merge with pharmacy group Alliance Unichem.
According to UK press sources, sales for the group fell by 1.4% over the Christmas period, compared to a 1.7% rise in sales over the retail sector as a whole.
The Sunday Telegraph cited a Boots spokesperson as saying sales were up against tough comparative figures, and the new Pharmaceutical Price Regulation Scheme had hit third quarter sales by around 1%. Core health and beauty sales, however, have been rising, she said.
The proposed merger with Alliance would create Alliance Boots, a company with combined sales of more than GBP13 billion, 3,000 retail outlets and a distribution network serving 88,000 outlets. The declining sales may increase investor concerns over the merger, which some feel may leave the management team over-stretched.
Meanwhile, the deal received a boost as EU regulators approved the sale of Boots' consumer healthcare division to Reckitt Benckiser for E1.9 billion.