Boots is an iconic brand – but challenges await the Weston family

In describing his family’s deal to buy British drugstore brand Boots, Canadian retail magnate Galen G. Weston touted the 177-year-old chain as “the U.K.’s most iconic pharmacy, health and beauty business.”

With the US$8.9-billion acquisition, the Weston family holding company, Wittington Investments Ltd. – with the backing of Toronto-based asset manager Fairfax Financial Holdings Ltd. FFH-T – will be buying a retailer that has a long-standing presence and brand loyalty in its home market.

It is also a retailer in need of attention after years of under-investment, according to industry experts.

Boots has had a succession of owners over the past two decades. Once an independent listed company, Boots merged with Alliance Unichem in 2006 to create Alliance Boots. The following year, private-equity firm KKR & Co. Inc. KKR-N and Alliance Boots deputy chairman Stefano Pessina took the company private in an £11.1-billion ($20.9-billion) leveraged buyout.

Then, U.S. drugstore company Walgreens came calling, taking a 45-per-cent stake in the business in 2012, followed by a takeover in 2014. Last year, U.S. private equity fund Sycamore Partners acquired Walgreens and Boots in a deal valued at US$24-billion, including debt.

With so many shifts at the top, Boots has not benefitted from the attention and investment that steady ownership brings, said Richard Hyman, a veteran British retail consultant.

“It needs some love, and it needs a longer-term view,” Mr. Hyman said.

While Canadian travellers may be familiar with Boots – a common destination to pick up forgotten toothpaste or medicines during trips to Britain – they are likely to have visited shops in larger cities, which have received more investment, he said. Boots, which has 1,800 locations, has allowed many other shops to grow shabbier.

“If you really want to make the most of those iconic, unique characteristics, you have to invest money in the business, and you have to be prepared for a payback period that stretches for years, not a couple of months,” Mr. Hyman said.

Wittington intends to invest in the store network, where refurbishments could improve customers’ perception of the brand, a source with knowledge of the deal said. The Globe and Mail is not naming the source, who was not authorized to speak publicly about the discussions.

“Living under the burden of private-equity debt is always extremely difficult for corporations, because executives are actually incentivized to make sure, first and foremost, that the interest on that debt be paid,” said Canadian retail industry consultant Doug Stephens. “And that will come at the exclusion of innovation; it will come at the exclusion of desperately needed renovations – any sort of improvements to the physical stores or the technology infrastructure.”

Other areas of focus will be improving the online shopping experience and investing in the loyalty program, which has 17 million members but could benefit from better tailoring of promotions to customers based on their buying habits.

“It’s a gold mine,” Mr. Hyman said of the customer data in the loyalty program. “It needs to be leveraged properly.”

Boots also has an opportunity to build up its beauty business, which is a major driver of the non-pharmacy revenues that made up about 70 per cent of the chain’s sales in the fiscal year ended Aug. 31, 2025.

In addition to selling beauty products in its stores, the company has a sizable private-label business, including brands such as the No7 Beauty Company, Sleek MakeUP and Liz Earle skin care.

But the chain is facing stiff competition for customers as other companies seek to grow their presence in the British beauty market. Just last month, Marks & Spencer MAKSF announced a deal with LVMH-owned LVMUY Sephora: The beauty retailer will open mini-shops inside M&S department stores and sell products on the M&S website.

“In the major locations, which is where Sephora is going to be opening in M&S, Boots is going to need to defend its beauty business,” Mr. Hyman said.

One strategy that is not on the table for the moment is international expansion for Boots, according to the source with knowledge of the deal.

As controlling shareholders of Loblaw Cos. Ltd. L-T, the Westons already own Canada’s largest drugstore chain, Shoppers Drug Mart.

Boots does have a history with the Canadian market – and with the Weston family. In the late 1970s, George Weston Ltd. WN-T sold two unprofitable drugstore chains to Boots’ British owners at the time, paving the way for the chain’s foray into Canada.

According to reports in The Globe and Mail at the time, Boots had planned to use the Canadian operations as a launching pad to expand into the United States. But turning a profit in Canada proved more difficult than expected.

But by 1988, the nearly 170 Boots stores in the country were losing money, dragged down by competition, particularly from superstores in the west. The stores also struggled with high costs for distribution and marketing. That year, the chain sold off or closed its stores and withdrew from Canada.