High-margin beauty services have helped Boots' bottom line

The company's pre-tax profit for the half-year came to �287.7m, somewhat higher than analysts' expectations.

Sales at the firm were up just 0.5% up on a like-for-like basis - although the company gained a boost from a 3.9% jump in sales for premium health and beauty products.

The company is hoping to increase its focus on high-margin spin-offs, such as health clubs and chiropody services.

Supermarket sweep

At the same time, Boots is planning to shed some of the costs of its lower-margin high street retail business by entering into a co-operation deal with other retailers.

The company recently opened its first outlet inside a Sainsbury's supermarket.

By signing deals with supermarkets, Boots also hopes to avoid the worst effects of competition in the healthcare market, where big retailers have been aggressively pushing down prices.

Boots' shares have performed weakly this year, and are some 40% down from their 1998 high - a peak achieved before the drug market was opened up to supermarket competition.