New feet, same Boots?

UK pharmacy Boots to be sold to US private equity firm Sycamore

Since 2022, Walgreens Boots Alliance (WBA), the US-based owner of Boots, has been attempting to sell the UK pharmaceutical chain to streamline its business operations to the domestic market. 

Whilst Boots is a ubiquitous brand in the British market, it has suffered with long-term uncertainties as healthcare consumers turn to online e-tailers to purchase big-name cosmetic and hygiene products.

Having been valued at $10 billion, initial efforts to offload the high street chain were hindered by difficulties during the Covid pandemic, as borrowing and interest rates warded away potential buyers. 

At last, Sycamore, a US private equity firm, has offered $10 billion to take Walgreens Boots Alliance, which parents both Boots and Walgreens in the UK and the US respectively.

Boots has struggled with customers turning to cheaper competitors for years. Now, it may face uncertainty with its own employees, dependent on what Sycamore decides to do come the fourth financial quarter of 2025.

It has not been a completely depressing outlook for Boots in recent years. It saw great success during the ‘NHS Pharmacy First’ program, being one of the largest participants with its numerous in-store pharmacies. 

This benefit to foot traffic was also supplemented by the UK’s vaccination rollout in the Covid years, boosting revenue and highlighting the company’s brand strengths as a healthcare product provider. 

Unfortunately, despite these efforts, the UK high street has been in decline over the years, as increased estate and energy costs disproportionately hurt retailers like Boots who rely on a customer-oriented in-store experience. 

Boots’ in-store experience, in particular, has also lost its sheen of late - UK consumers have criticised its “outdated” store layouts and “cramped” shelving displays. Its indoor decor is viewed as paling against competitors such as Superdrug and Lush, who’ve embraced more contemporary designs.

None has been more damaging than the effects of e-tailers, however. George Godber of fund manager Polar Capital has noted Boots’ “struggling business model” since “people are buying more of those personal healthcare brands online than they do in the shop”.

Internet destinations such as Amazon and LookFantastic offer lower prices, efficient delivery and a broader product range. Their online models thrived during the pandemic, and are continuing to do so as consumer habits have permanently shifted to the detriment of traditional brick-and-mortar stores.

WBA’s American Walgreens branch has suffered similar problems, having announced the closure of 1,200 stores back in October 2024. Its stock market value has plummeted 80% in the last few years, despite extended trading in New York.

WBA sheds 75% over 5 year period Source: Google Finance

It is prudent then that Sycamore, who is acquiring WBA at $11.45 a share (worth more than it is on the US stock market representing a 29% premium) has prior experience with turning around failing retailers.

It revitalised lingerie retailer Victoria’s Secret back in 2016 by modernizing its underwear lines for comfort and more modern, diverse tastes. Boots and Walgreens could do with a similar streamlining and modernizing strategy.

It would be a nearsighted approach to write Boots off at this time. With a few thousand locations across the UK, it enjoys a brand heritage stemming from 1849. 

These strengths are enhanced by its partnerships with the NHS, boosting the positivity of its name as not just a cosmetics provider, but also for its healthcare services.

This goes the extra mile in a country renowned for possessing taxpayer-funded healthcare free at the point of use. As Catherine Shuttleworth, CEO of Savvy Marketing puts it, Boots holds a “unique place in the British psyche”.

Its incoming owner Sycamore should do well to dispel fears of job losses or closures, even in light of the retailer’s threatening online competitors. 

As a staple of Britain’s high streets, Boots still has many more miles to walk.