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Boots Refining Focus to Core Units

LONDON — Boots PLC has abandoned its move into Botox injections, massages, makeovers and manicures in a rethink of a strategy that now will see the U.K. retailer focus more on its core Boots the Chemists chain.<br><br>The group plans to close...

LONDON — Boots PLC has abandoned its move into Botox injections, massages, makeovers and manicures in a rethink of a strategy that now will see the U.K. retailer focus more on its core Boots the Chemists chain.

The group plans to close its 12 Wellbeing centers in areas including Manchester, Oxford, Reading and London, and will ditch the remainder of its Pure Beauty stores. The closures represent a significant retreat for Boots, which had proclaimed the two concepts as a major move into beauty and treatment services.

The decision is the latest in a series of back-to-basic strategies by Boots, under the leadership of chairman John McGrath and Steve Russell, the outgoing chief executive, who, after a four-month search, still hasn’t been replaced.

McGrath and Russell originally thought the Wellbeing concept would be the key to topline sales growth at the core Boots the Chemists chain, which is suffering from growing competition from supermarkets. “They’re the real threat to Boots and they’re not going to be going anywhere soon,” said an analyst, who spoke on condition of anonymity.

The company is also dumping Pure Beauty. The six existing stores will either close or be converted into branches of Boots the Chemists, not to the surprise of analysts after the company halted rollout plans for a further 65 stores in November last year.

“It was a sure indication things were perhaps not going as well as they had hoped,” suggested another analyst. “After news like that consumers begin to lose faith.”

A spokesman at Boots said although customers were happy with the service, they weren’t returning in sufficient numbers. “Wellbeing and Pure Beauty didn’t live up to our expectations,” said the spokesman. “Ultimately, the concepts weren’t making enough money to make them viable.”

The Wellbeing and Pure Beauty stores were aimed at tapping into the niche beauty market pioneered in the U.K. by Space.NK and subsequently developed by such department stores as Selfridges, Harvey Nichols, House of Fraser and Harrods. But neither concept was developed fully enough. Boots originally proclaimed Pure Beauty as a cutting-edge chain that would compete directly with Space.NK; instead it focused on major brands like Clarins, Clinique and Bobbi Brown rather than the niche products the more-fashionable consumers demanded. Meanwhile, the U.K. treatment market underwent a boom, but women preferred to get their treatments from day spas or salons rather than an offshoot of the mass-market Boots the Chemists.

The changes will result in 700 job losses and exceptional charges of $86 million, of which $47 million relates to asset write-offs, though it’s anticipated the actions will improve trading profit by around $34 million in 2003/2004 and each year thereafter.