Newspaper article The Evening Standard (London, England)

Boots Wobbles on Plan to Open Up Drugs Sales

Newspaper article The Evening Standard (London, England)

Boots Wobbles on Plan to Open Up Drugs Sales

Article excerpt

Byline: MICHAEL CLARK

HIGH Street chain Boots fell 141/2p to 5771/2p today on worries that it may be a big loser if the Government pushes ahead with plans to relax rules on the retail sale of drugs.

Only 12,000 pharmacies are licensed to sell drugs but that number could rocket if the Office of Fair Trading changes the rules. For the past year, it has been investigating whether competition is being stifled and if consumers are paying too much.

If the OFT decides this is the case, the winners are likely to be the big supermarket chains such as Asda, part of the giant US retailer Wal-Mart, which spent pound sterling150 million last year on buying 300 licences. Asda reckons it can make pound sterling270 million of price cuts if it is allowed to open more pharmacies in its stores.

Fewer than 100 of Boots' 1430 outlets do not have a pharmacy. Tony Shiret at broker Credit Suisse First Boston, a long-term bear of the stock, reckons it will suffer a significant decline in profitability. He recently wrote: "Boots' suggestion that it expects any outcome to be broadly neutral looks optimistic." The company bought back a million of its own shares at 598p yesterday.

Interim profits towards the top end of expectations and bullish comments about current trading at J Sainsbury were rewarded with a rise of 1p to 294p.

Broker UBS Warburg has repeated its buy recommendation and raised its 12-month target price from 325p to 350p. The same broker has downgraded its rating on luxury fashion retailer Burberry, 3p firmer at 239p, from buy to hold in the wake of yesterday's solid interims.

Share prices traded in narrow limits for much of the day ahead of opening gains on Wall Street this afternoon. The FTSE 100 index rose just one point to 4097.5 in thin trading. Sir Martin Sorrell's advertising giant WPP fell 101/4p to 453p on the back of a gloomy trading update overnight from its big US rival Interpublic. …

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