Boots plans to focus on its core high street business

Boots said profits were hit by the disposal of car and bicycle accessories store Halfords, the cost of investments and existing loss-making businesses.

The worsening performance comes despite a round of cost-cutting and a concerted drive to improve sales and exclude one-off items.

While sales rose over the year, the price cuts brought in to encourage more customers offset the increase.

The company announced earlier this month that it was to scale down its personnel department at its headquarters in Nottingham.

On Thursday, it said 500 jobs would go, including from the human resources, finance and IT functions.

Chairman John McGrath refused to rule out further job losses and said there were "probably" more to come as Boots has set itself a target of saving �100 million.

Further investment

For the past six months Boots has been cutting jobs across the UK, including closing its Airdrie factory and Wellbeing beauty treatment centres.

Profits for the year before exceptionals fell to �555.4m ($907.2m), in line with forecasts after providing guidance to analysts in March.

A new chief executive is due to arrive in September to help revitalise the company's core chemist chain.

MrGrath said the company would be investing a further �40m on price reductions.

Mr McGrath said: "What you can see from the results in the last year is that with our mix of pricing and breadth of range and the investment that we did we had a successful year of sales growth."