Boots the Bank - coming soon?

We could be picking up an ISA along with our sun tan lotion and prescriptions, if Boots has its way...

Last Updated: 06 Nov 2012

Alliance Boots boss Stefano Pessina told the FT this weekend that the chemist was pondering a move into other areas – including financial services – to try and boost growth. Although Boots the Bank is ‘not on his immediate to-do list’, it’s certainly one of the options under consideration in the medium term – and if Pessina goes ahead with his plan to give up some of the day job, he should have plenty of time to think about it. First Tesco, now Boots… Are we really so disenchanted with our high street banks that we’d rather get our mortgage from a pharmacist?

Pessina (who was the subject of the MT Interview last year) reckons Boots has to look at other areas, because of the limited growth potential in its core retail market. ‘We have to add services,’ he told the FT. ‘We have to be very active in order to offer more and more to customers and we have a lot of ideas.’ Financial services was one of the options discussed, apparently, while it’s also working on offering more medical services – including vaccinations, ‘drive-through’ pharmacies, and even doctors’ surgeries (as the Government tries to push some of the NHS’s load onto the private sector).

However, Pessina also hinted that Boots had been pretty ham-fisted in its previous efforts to diversify into services – like beauty treatments and laser eye correction. ‘If the execution had been more accurate, probably now Boots would have a good business there,’ he said. ‘It is probably too late to go back. We have to think of different options.’ What he politely neglected to mention, of course, was that this happened before his watch – so presumably he’d like to think that Boots would do a much better job this time around.

As part of this, he may also be thinking about giving up some of the day-to-day aspects of his job. He became executive chairman of the company as part of its £11bn sale to private equity firm KKR back in 2007 – but according to the Times, he now wants to hire a senior director to take over the nitty-gritty, giving him more time to focus on the strategy and new business stuff. This would have the added advantage of being more palatable to institutional investors, as and when KKR decides to flog Boots back to the stock market.

As and when that day comes, a flourishing financial services business would certainly boost the valuation a bit. And if it’s ever going to work, now is probably the time...

In today's bulletin:
Rich List not so rich any more
Businesses bemoan Equalities Bill red tape
Boots the Bank - coming soon?
Asos thriving as shoppers go postal
Managers and mobsters on the silver screen

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