The shoe crisis deepens as US owner Walgreens announces plans to ax stores

Boots faces an increasingly uncertain future as the crisis engulfing its American owner deepens.

In a grim update for Wall Street investors yesterday, Walgreens Boots Alliance announced plans to close a slew of US stores due to pharmacy woes there.

Shares in the drug giant, which has owned British stalwart Boots since 2014, fell 25 percent to a 27-year low.

Earlier this month, Walgreens insisted “all options are on the table” as it considers whether to sell Boots or float it as a separate business.

A listing of its shares in London would be a big boost for the City amid concerns about the health of the UK stock market.

But yesterday’s dismal results underlined the challenge facing Walgreens as it tries to sort out its US business – casting fresh doubt over its plans for Boots.

“They have to do something at this stage,” said Jonathan De Mello, head of JDM Retail Consultancy.

“The future is uncertain, but I imagine they’re preparing for a process behind the scenes.” Walgreens did not specify how many of its 8,600 U.S. stores will be closed — but it could be as many as a quarter.

The business has struggled to compete with rivals in the sale of prescription drugs and last October appointed a new boss, Tim Wentworth, in a bid to turn its fortunes around.

Yesterday it cut its profit targets for the current financial year, saying it blamed “challenging pharmaceutical industry trends and a worse-than-expected consumer environment”.

Speculation about the future of Boots, which counts actress Keeley Hawes as an ambassador for its No.7 range, has been rife in recent years.

In 2022, Walgreens abandoned plans to sell the company due to an “unexpected and dramatic change” in market conditions.

Private equity giants Apollo, TDR Capital and Sycamore submitted bids, but Walgreens later said no one submitted an adequate offer.

If Boots, which started as a family-run herbalist shop in Nottingham in 1849, were to return to UK markets, it would be a much-needed vote of confidence.

Boots sold its pension scheme to asset management giant Legal & General for £4.8bn last November, paving the way for a potential takeover.

The deal, which was one of the largest of its kind, means it will be an easier sell.

Despite the gloom over Pond Boots, it said sales in the three months to May 31 were up 6 per cent on a year ago.

Products including model Kylie Jenner’s Cosmic fragrance range and beauty brands such as Sol de Janeiro and Byoma are flying off the shelves.

Boots UK and Ireland boss Sebastian James said: “This is another set of consistently strong results for Boots.

“I am pleased to see our positive momentum continue across the business, with both retail and healthcare increasing sales and market share growth for the thirteenth consecutive quarter.”