Sept. 28 (Bloomberg) -- Alliance Boots Holdings Ltd., owner of Britain’s largest drugstore chain, said it expects low growth to continue in the U.K. for the next 12 months as consumers curb spending.
“It’s got harder recently, and my own view is that will continue, but consumers will come out at Christmas a bit more,” Alex Gourlay, head of the company’s health and beauty unit, said in an interview at the World Retail Congress in Berlin today. “It may get easier in some dimensions over the 12 months ahead,” as the effects of a value-added tax increase imposed at the beginning of 2011 wear off next year.
The International Monetary Fund lowered U.K. economic growth forecasts on Sept. 20, predicting gross-domestic product increases of 1.1 percent for 2011 and 1.6 percent in 2012, and said the government may need to delay some measures aimed at narrowing the budget deficit. Britain’s VAT rate was raised to 20 percent this year from 17.5 percent in 2010.
Alliance Boots has had a “solid summer,” with new products in its No. 7 beauty range helping growth, Gourlay said.
“We’re happy with the performance in tough markets, and the international performance is doing well,” he said. “The balance between international growth and organic growth makes us feel OK.”
Trading profit, or profit from operations excluding amortization and one-time gains or costs, rose 14 percent in the year through March as the Nottingham, England-based retailer acquired businesses and began selling products such as the Boots Laboratories Serum 7 skin-care range overseas.
Alliance Boots said in May that it’s considering acquisitions for the wholesale division and expanding sales partnerships to counter a “subdued” consumer market. The retailer said in July that it’s in talks on buying a stake in the parent company of Chinese drug wholesaler Nanjing Pharmaceutical Co.
--Editors: Tom Lavell, Paul Jarvis
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