Boots chief James quits after owner’s £5bn sale plan stalls

Published

2 days ago

June 29, 2024

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The chief executive of Boots, Britain’s biggest high street pharmacy chain, is quitting after its owner’s plans for a £5bn sale or stock market listing stalled.

Sky News has learnt that Sebastian James, who has run Boots since 2018, will leave the company in November.

City sources said this weekend that he had accepted a new role in the healthcare industry.

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His exit comes soon after it emerged that New York-listed Walgreens Boots Alliance (WBA), the British retailer’s owner, had decided for the second time in two years against pursuing a sale or stock market flotation of the chain.

An announcement about Mr James’s departure is expected in the coming days.

WBA is not yet thought to have lined up a successor.

Mr James, who previously ran the electricals retailer Dixons (now named Currys), recently endorsed Sir Keir Starmer – a notable move because of his long friendship with Lord Cameron, the foreign secretary.

His departure from Boots will come during the Nottingham-based company’s 175th year.

Boots employs about 52,000 people and trades from roughly 1,900 stores.

Its recent trading performance has been strong, with WBA this week saying that like-for-like sales at Boots during the quarter to the end of May rose by 6% and 5.8% across its retail and pharmacy operations respectively.

An insider said Mr James had overseen a successful turnaround, with market share having grown for 13 successive quarters.

It has been a rare bright spot for WBA, which has had a torrid time and has seen its shares slump.

A WBA spokesperson said this week: “As Walgreens Boots Alliance continues a strategic review of the Company’s assets, we took a critical look at Boots.

“While we believe there is significant interest in this business at the right time, Boots’ growth, strategic strength and cashflow remain key contributors to Walgreens Boots Alliance.

“We are committed to continuing to invest in Boots UK and to find innovative ways for this business to fulfill its potential.”

During a previous auction in 2022, only one bidder – a consortium of Apollo Global Management and Reliance Industries – tabling a formal offer worth about £5.5bn.

However, growing concerns about the global economy had triggered severe doubts among large banks which help finance leveraged buyouts, with Boots among the biggest such deals in Europe.

Among the other challenges facing prospective acquirers at the time was finding an adequate solution for Boots’ £8bn pension scheme – one of the largest private retirement funds in the UK.

This issue has now been resolved through an insurance deal struck with Legal & General.

Like many retailers, Boots had a turbulent pandemic, announcing 4,000 job cuts in 2020 as a consequence of a restructuring of its Nottingham head office and store management teams.

Shortly before the COVID pandemic, Boots earmarked about 200 of its UK stores for closure, a reflection of changing shopping habits.

Boots’ heritage dates back to John Boot opening a herbal remedies store in Nottingham in 1849.

It opened its 1000th UK store in 1933.

In 2006, Boots merged with Alliance Unichem, a drug wholesaler, with the buyout firm KKR acquiring the combined group in an £11bn deal the following year.

In 2012, Walgreens acquired a 45% stake in Alliance Boots, completing its buyout of the business two years later.

Boots declined to comment on Mr James’s exit on Saturday.

Business

House prices still unaffordable for the average earner despite wage rises – Nationwide

Published

7 hours ago

July 1, 2024

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House prices still unaffordable for the average earner despite wage rises - Nationwide

Average house prices are still unaffordable for the typical earner, the UK’s largest building society has said.

Despite wages rising above the rate of inflation in recent months and house prices falling from the record high of summer 2022, “housing affordability is still stretched”, Nationwide said.

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A greater proportion of take-home pay is going on mortgage bills, according to the lender’s house price index.

Someone earning the average UK income seeking to buy their first home with a deposit worth 20% of the asking price will have a monthly mortgage bill of 37% of their end pay packet.

It’s above the long-standing average of 30%.

The mortgages affect

While people have been typically earning more and house prices are 3% lower than the all-time high two years ago, rising mortgage costs have made unaffordability worse.

With high interest rates – raised to 5.25% by the Bank of England to bring down inflation – have come more expensive mortgage costs.

According to Nationwide, the interest rate on a five-year fixed-rate deal for a borrower with a 25% deposit was 1.3% in late 2021. That has soared and is now around 4.7%.

Latest official figures showed basic pay grew 6% in the three months to April, while inflation – the rate of price rises – was 2.3% in the same month. But data from living-standards thinktank the Resolution Foundation said weekly wages have increased by just £16 in 14 years when inflation is factored in.

Compounding affordability problems is the fact UK house prices are back on the rise and were 1.5% more last month compared to June 2023.

Fewer mortgages, more cash

There have been fewer house-buying transactions over the past year, Nationwide added.

The total number of transactions is down by roughly 15% compared to the pre-pandemic year of 2019.

Higher borrowing costs have meant transactions involving a mortgage are down even more, nearly 25%.

Cash transactions, however, are up 5% on pre-pandemic levels.

Figures released by the Bank of England on Monday morning showed mortgage approvals continued to fall.

House sales are likely to fall as the number of mortgages approved dropped to 60,000 in May from 60,800 in April.

Would-be buyers borrowed half the amount of money to purchase a home, the Bank said, £1.2bn was loaned in May, down from £2.2bn in April.

The same data showed that personal lending, such as credit card debt and personal loans, grew. It suggests increased consumer demand.

The region with the fastest house price growth was Northern Ireland at 4.1% across the three months of April to June, while it became 1.8% cheaper to buy a house in East Anglia over the year, according to Nationwide figures.

Business

Strikes at Tata’s Port Talbot steelworks called off after change in closure date

Published

8 hours ago

July 1, 2024

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Strikes at Tata's Port Talbot steelworks called off after change in closure date

A planned strike at the Port Talbot steelworks has been suspended after the Unite union said new investment was proposed.

Unite is suspending its industrial action, it said, after the news on Thursday that the Indian conglomerate owner, Tata, would, in response, close the site earlier than first announced.

Talks throughout the weekend yielded a “significant development” in the form of an agreement from Tata to discuss future investment and not just redundancies, the union said

The closure date is now 7 July, the day before the previously planned strike and roughly two months before the September timeline originally announced to close the final blast furnace in which steel is made.

Up to 2,800 jobs are to be lost – 2,500 in the next year, and a further 300 in three years despite a £500m taxpayer cash injection to support the site’s transition to cheaper, greener steel production to cut emissions.

The first steel blast furnace was due to close at the end of June in a push to reduce carbon emissions at what is the UK’s single largest source of CO2.

The previous fossil-fuel-powered blast furnaces are being replaced by a single electric arc furnace.

Union response

It was in protest to job losses, and the effect on the local community, that Unite members were striking.

The early closure decision by Tata was last week described as being the “latest In a long line of threats that won’t deter us” by Unite’s secretary general Sharon Graham.

“The strikes will go on until Tata halts its disastrous plans,” she said on Thursday. An overtime ban had already been in effect from 17 June.

Another union representing Port Talbot steelworkers welcomed Unite’s industrial action pause and the fact it was getting “back around the table with their sister steel unions”.

Tata would resume discussions if the strike was called off, Alun Davies the national officer for Community the steelworkers’ union said.

“The truth is Tata never walked away from those discussions, and at our last meeting on 22 May all unions agreed to conclude the negotiations and put the outcome to our members. Community will welcome resuming those discussions, but we regret that zero progress has been made since 22 May.”

Tata has been contacted for comment.

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Energy price cap falls today but £600 lift to annual bills ahead, report warns

Published

20 hours ago

June 30, 2024

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Energy price cap falls today but £600 lift to annual bills ahead, report warns

As the latest reduction in the energy price cap takes effect, households are being warned of a big lift in bills ahead due to higher wholesale gas prices.

The cap, which limits what suppliers can charge per unit of energy, fell by 7% overnight in the wake of the latest three-month review by industry regulator Ofgem.

The reduction meant that typical 12-month bills will be around £500 cheaper than a year ago.

It left the average bill at £1,568 – a figure that will apply until the result of the next review takes effect in October.

However, a report by the Energy & Climate Intelligence Unit (ECIU) said on Monday that consumers should brace for an additional hit of up to £600 over the coming winter, largely due to higher wholesale prices.

It pointed to a possible £200 price cap hike from October on the back of some analyst calculations, suggesting it was plausible the total could remain around that level until June.

One calculation, by experts at Cornwall Insight and released on Friday, predicted a 10% – or £155 – increase from 1 October to £1,723 a year but said there remained uncertainty on the market path ahead.

Consumer groups say there is an alternative to the price cap, pointing to a growing number of fixed-rate deals on the market following a dearth of competition in recent years.

European wholesale costs are again elevated for the time of year based on pre-energy shock norms.

Recent pressures have included strong competition from Asia, particularly China, for liquefied natural gas (LNG).

That has replaced some of the Russian natural gas volumes that were stripped away in the wake of the invasion of Ukraine in February 2022.

A planned extension of the European Union’s sanctions regime against Russia will see its LNG exports targeted for the first time – potentially placing further pressure on supply across the continent.

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UK household costs for both gas and electricity stood at an average of just below £1,090 ahead of the Russia-Ukraine war.

The ECIU report said: “By September 2025, the average household could have paid an extra £2,600 on energy bills during the ongoing gas crisis.

“With the government also spending £1,400 per home earlier in the crisis, the total extra costs could be £4,000 per home, and counting.”

Energy has been among the big battlegrounds of the election.

Much of the debate has centred on costs but the impact of gas use in particular has fuelled argument too on the UK’s climate commitments.

Dr Simon Cran-McGreehin, head of analysis at ECIU, said: “The UK’s high dependence on gas for electricity generation and heating has cost bill payers £2,000 so far during the gas crisis and the economy as a whole tens of billions of pounds.

“Common sense measures like investing in insulating the poorest homes, switching to electric heat pumps and fast-tracking British renewables will leave us less vulnerable to the whims of the international gas markets.

“North Sea gas output is declining so unless we make the switch we’ll be ever more dependent on foreign imports.

“The maths is clear, when it comes to energy independence, new drilling licences are a side show making a marginal difference compared to the immense quantity of homegrown energy that offshore wind and other renewables can generate.”

Emily Seymour, the editor of Which? Energy, said: “Consumers will be relieved to hear that the price cap is dropping by around £122 for the typical household from 1st July.”

She added: “With the price cap predicted to rise again in October, many consumers will also be wondering whether to fix their energy deal.

“There’s no ‘one size fits all’ approach but the first step is to compare your monthly payments on the price cap to any fixed deals to see what the best option is for you.

“As a rule of thumb, if you want to fix, we’d recommend looking for deals as close to the July price cap as possible, not longer than 12 months and without significant exit fees.”