LONDON — Boots could soon be expanding its franchise across the Atlantic, with plans to bring its retail concept to the U.S.
Britain’s biggest cosmetics and pharmacy chain is holding talks about opening retail outlets with local partners inside chain stores, although a Boots spokesman declined to specify which stores.
“We are currently talking with potential partners regarding a trial to see if the model used in Hong Kong would work in parts of the U.S. Right now, we can’t even confirm the cities we’re targeting,” said a spokesman at the company.
The move to the U.S. would emulate a similar tactic that Boots has adopted in parts of Asia, where the company is a partner with Watsons, a retail chain owned by Hutchison Whampoa, the conglomerate. The move to the U.S. would see Boots’ own brands — such as Botanics and the No. 7 and No. 17 cosmetics ranges — as well as FCUK, Toni & Guy and Essentials, stocked in American store chains.
Industry analysts, who have watched the company wind down its overseas interests for two years, were skeptical about the proposed U.S. move. In March, Boots announced it was closing branches in Italy and the Netherlands and in 2001 it closed its chain of chemists in Japan at a cost of $41.6 million. All figures have been converted from the British pound at current exchange rates.
“If Boots feels the Hong Kong partnership is going well, then a move to the U.S. makes sense. America is the home of the drugstore, but Boots shouldn’t get ahead of itself,” said one London analyst. “To crack New York is especially hard, it tends to be far more self-sufficient and inward-looking.”
Although talks on the American project are in the early stages, and the launch of trial formats is at least six months away, analysts have expressed some doubts.
“The chances of Boots succeeding in the U.S. are not overwhelming,” said a London-based industry analyst. Another said Boots needed to concentrate on its home market in Britain before venturing further afield. “It wasn’t long ago that Pure Beauty seemed like a great idea — it wasn’t.”
— Sarah Harris
GRASS PLEADS GUILTY: Martin Grass, the former chairman and chief executive officer of Rite Aid Corp., on Tuesday pled guilty to conspiracy charges as part of a plea agreement in a U.S. District Court in Harrisburg, Pa.
According to Thomas Marino, the U.S. Attorney in Harrisburg, Grass pled guilty to one count of conspiracy to defraud and one count of conspiring to obstruct justice. As part of the agreement with the U.S. government, Grass also agreed to pay a fine of $500,000 and forfeit $3 million to the U.S. He also agreed to an eight-year jail term, but could face a lesser sentence depending on his cooperation with authorities in their ongoing investigation of Rite Aid’s accounting antics.
Grass, the 49-year-old son of the chain’s founder, entered his plea six days before he was set to face a criminal trial. As reported, a 37-count indictment was handed down last June, charging Grass, along with other former Rite Aide executives, with masterminding an accounting fraud that overstated earnings by $1.6 billion. A sentencing date has yet to be scheduled.
Former chief financial officer Frank Bergonzi on June 5 changed his plea to guilty on a single conspiracy charge five days before the original trial date. His plea led to the two-week delay of the start of the government’s case against Grass and Franklin Brown, former vice chairman and general counsel. With Grass’ plea, Brown is left to stand trial alone Monday. It could not be immediately determined whether Brown might also consider changing his plea.
— Vicki M. Young