Health and beauty retailer Boots reported a 6 per cent rise in half-year profit today, as cost cutting at its core chemist chain offset weak sales growth.
The retailer said it remained confident of meeting full-year expectations despite the uncertain economic climate, and that it was on track to get £250 million of annualised cost savings.
"The early sales of Christmas gifts look very encouraging," chief executive Mr Steve Russell told reporters.
Pre-exceptional pre-tax profit came to £287.7 million, above top-end estimates of £282 million.
Analysts said Boots had done enough to underpin current full-year profits forecasts of about £613 million and the shares rose on relief, but they were disappointed by a slowdown in the core retail business in the second quarter.
Boots The Chemist, which has a 25 per cent share of the British health and beauty market and provides 85 per cent of group profits, delivered a 0.5 per cent rise in like-for-like sales and increased gross margin by 0.3 per cent over the first six months.
Shares in Boots climbed 1.5 per cent or 9p to 622p, having reached a peak of £10 in 1998. They have made little progress in the past six months but have outpaced rivals. The rating is a below-average 12.6 times forward earnings.
One-off charges relating to disposals and failed business ventures such as Bootsphoto.com and Boots Japan amounted to £38.8 million during the reporting period.
But Mr Russell said, strategically, Boots needed to maintain its loss-making Internet operations and its presence abroad.