Health and beauty retailer Boots reported a slight fall in first quarter underlying sales at its chain of chemists and warned investors not to expect trading to pick-up any time soon.
"Conditions on the high street are difficult, competition is intense and there is nothing to suggest this will change in the coming months," said chief executive Richard Baker.
For the three months to end-June, sales at Boot the Chemist (BTC) on a like-for-like basis, which strips out the impact of new and closed space, were down 0.8 per cent - at the lower end of analyst expectations which ranged from about minus 1 per cent to plus 2 per cent.
Total sales at the 1400-store chain, which is being squeezed by the supermarkets and high street discounters, were up 1.5 per cent. Health sales were up 1 per cent, and beauty and toiletries sales were up 3.5 per cent. However, sales in the "lifestyle" category were down 2.5 per cent, reflecting continued decline in the photo market and a slow start to summer ranges.
The group has previously flagged that BTC's operating profit for the year to end-March 2006 will be lower than the £470 million sterling achieved in the year to end-March 2005, due to anticipated lower UK consumer spending and higher infrastructure costs. Analysts are forecasting operating profit of about £425 million.
Over the last two years prices on some 3,300 lines have been cut by an average of 18 per cent, an investment of over £200 million.