Boots clinches deal with US retail giants

Boots has struck a deal with US retail giants Target and CVS to open branded areas in their stores.

The transatlantic link-up is one of the most ambitious initiatives yet by Boots Retail International since its decision to abandon the opening of standalone stores overseas.

Boots-branded sections carrying No 7 and Botanics products will make their debut in a limited geographical trial, focused on the East Coast and Denver, next spring. The US chains will test Boots implants across 32 stores.

If successful, the scheme's potential is phenomenal. Target - the world's seventh-biggest retailer - has nearly 1,500 discount stores. Drugstore outfit CVS has more than 4,000.

Since turning its back on overseas standalones, Boots has entered new markets via its 'low-cost implant model' honed in the Far East, where it operates in partnership with Hutchison Whampoa's Watsons stores. The same approach will be used in the US.

'Early experience in the Netherlands, Thailand and Taiwan indicated that opening our own stores was not the best way of establishing Boots outside the UK,' said a spokesman. 'The US market is low cost, has the backing of US retailers and will teach us a lot.'

CSFB analyst Tony Shiret said the venture was a 'rubbish idea'. 'What is it about Boots' products that Target can't get some bloke to do in America a lot cheaper?' he asked.

Last week, Boots reported an interim pre-tax profit rise of 10.7 per cent to£280.5 million after exceptionals. Sales were£2.49 billion.