The shake-up will dent 2005 profits but boost business, Mr Baker says

Pre-tax profits for the six months to September sank to �146.6m from �281.7m a year earlier.

The fall was due to the cost of closing a variety of fringe businesses and an average 5% cut in prices at Boots - which has boosted sales by 3.8%.

Boots has cut prices as it tries to win back ground lost to supermarket chains, such as Tesco and Asda.

"This is a demanding year of change and investment ... the actions we are taking have impacted profit, but are necessary to deliver a sustainable long-term return for shareholders," chief executive Richard Baker said.

In recent months the group has pulled out of therapeutic areas such as dentistry and laser eye care, changed its supply and distribution network and timetable and also begun the closure of its Airdrie factory.

Revival plan

In March, the firm announced a surprise �390m investment and shake-up plan which it warned would hit profits for the year to March 2005.

Of this �390m, �140m was to be invested in its current stores and �90m earmarked for price cuts.

A further �250m would be used to open 60 more stores, mainly on edge-of-town sites.

As part of this plan, the company has already cut 1,600 jobs.

Growth drive

In an effort to boost its sales, Boots moved away from its traditional grooming and health products and expanded into new lines such as mobile phones.

The retailer is also considering stocking sex toys to strengthen sales among its key female customer base.

As a result of the shake-up, like-for-like sales at its core Boots the Chemist chain were 3.8% ahead of a year ago, lifted by longer opening hours and price cuts on 3,300 product lines.

Meanwhile, footfall - the amount of people passing through its stores - increased by 4% compared to a year ago.

But, it added, the poor weather this summer meant seasonal ranges were in low demand and so shaved 0.5% off sales growth.

Earlier this week, the company appointed Scott Wheway to be retail director to head its 1,400 Boots the Chemist shops across the UK.