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Boots seeks big expansion in China

Alliance Boots plans to double its Chinese operations within two years, after revenues fell for first time since merger

Alliance Boots plans to double its Chinese operations within two years, becoming a nationwide operator in the country, as the company’s revenues fell for the first time since Boots Group and Alliance UniChem merged in 2006.

The company, which recently sold a stake of its business to US pharmacy giant Walgreens, said it already has operations in 17 Chinese provinces and wants to expand to all 34. Bosses also have an eye on an expansion into South America for the first time.

The decision comes as the company said revenues were down 2.6% to £22.4bn, with underlying profit after tax up 12.7% to £805m.

In the UK, under the Boots brand where it has 2,000 stores, sales were £6.55bn, down 2.9%, as the high street continued to suffer.

The chief executive of health and beauty, Alec Gourlay, explained: "Footfall is down across the whole UK by around 3% and we mirror that."

He said the fall in sales was also due to some best selling medicines, especially high cholesterol-reducing drug Lipitor, losing their exclusivity patents.

Profits were boosted by an increase in margins, with haircare and "indulgent bathing products" doing particularly well.

The No 7 anti-ageing products have also been successful since being introduced in Walgreens’ Hollywood store, bosses said.

And while UK products are finding their way across the Atlantic, Alliance Boots chairman Steffano Pessina was clear the cigarettes sold in Walgreens would not appear on shelves in Boots.

He said: "It would be absolutely inconceivable to sell cigarettes in our European stores."

The company’s tax bill has also increased to £114m, up £31m, including a £64m UK corporation tax bill.