Retail sales up 2.5%
Alliance Boots overcame competitive Christmas trading conditions to notch up a record third quarter revenue rise at its core health and beauty business.

The company, created last year when retailer Boots and wholesale giant Alliance UniChem merged, posted a total UK retail sales uplift of 2.5 per cent and like-for-likes ahead 1.5 per cent.

Boots' racy Christmas TV ad campaign, which featured glamorous women stuffing a turkey and peeling Brussels sprouts and aired after the 9pm watershed, contributed to the sales increase. Better buying led to a higher trading margin and less discounting.

Beauty and toiletries performed well, as did Christmas gift lines, and Boots began the new year with 'seasonal inventories in line with expectations'.

At the wholesale arm, total sales rose 5.1 per cent and like-for-likes increased 1.6 per cent

Chief executive Richard Baker maintained that the merged business was on track and said: 'Total and like-for-like sales grew in both divisions which, combined with our good margin management, reinforces our confidence for the full year.'

He said that one fewer Saturday in the reporting period and one additional Sunday reduced like-for-likes by 0.7 per cent, but that impact would be reversed in the fourth quarter.

Changes to prescription reimbursement rules, which affected Boots' dispensing business, reduced underlying revenue growth by about 1.2 per cent year on year.

Seymour Pierce analyst Richard Ratner said the performance was 'below par' and noted: 'Alliance is a low-margin operation and, longer term, we do not believe the pricing pressures from the supermarkets have gone away.'