Outlook: Lord Blyth sheds albatross at last
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Your support makes all the difference.IT HAS taken Lord Blyth, chairman of Boots, 10 years to get the Ward White albatross off his back. When that deal was done, the reasoning was that with Boots the Chemists threatening to go ex-growth, the company had to diversify. So for the princely sum of pounds 900m, Lord Blyth acquired the peerless portfolio of Payless DIY (later merged with WH Smith's Do It All), AG Stanley (including Fads and Homestyle) and Halfords. That it was a disaster on a grand scale goes without saying. The housing boom turned into a bust and the brands revealed themselves as some of the weakest in their sectors.
Now Do It All has gone for pounds 68m (minus the small matter of a pounds 312m write off). AG Stanley has already been sold for pounds 1. So only Halfords, which at most would be worth half the balance, remains. Along the way, there's been untold investment in the three brands. Quite a squandering of shareholders money, then.
Ironically, while the Ward White businesses were heading south at a rate of knots Boots proved itself more resilient than anyone could have imagined. Far from being eaten away by the supermarkets, it has powered ahead regardless. It has consistently delivered margins of more than 10 per cent and accounts for 85 per cent of group profits.
It has even managed its own diversification - into travel insurance, home shopping and stores in Ireland, Holland and the Far East. Boots Healthcare International, maker of Nurofen, Strepsils and so on, is also prospering. At its most basic this is an argument for sticking to one's knitting, a lesson that WH Smith is now following with the sale of Waterstone's, Our Price and other periphery businesses.
What is not quite clear is how much of the credit should go to Lord Blyth. The plaudits might rather seem to belong to the management team at Boots the Chemist. In one respect Lord Blyth has achieved his ambition for the company. If memory serves, his aim was to take Boots from the bottom of the second quartile of the Footsie to the top. In that regard he has succeeded. Boots currently lies 27th. How much of a role Lord Blyth played in that assent is a matter of opinion.
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