The gloom enshrouding the high street darkened yesterday as Boots posted an 11 per cent fall in annual profits and warned that bad conditions were delaying recovery.
Prospects for the country's top health and beauty products retailer worsened even further as Asda, part of the mammoth US supermarket operator Wal-Mart, said it was moving deeper into its territory.
Boots, which issued an earnings warning in March, said pretax profits for the year to March 31 fell to £481 million, beating forecasts of £477 million.
The 1 , 400 - branch, Nottingham-based company, which last month put its Healthcare International business up for sale, said the competitive environment and a slowdown in spending meant an overhaul of the business had not been easy - although the early signs were "encouraging".
Chief executive Richard Baker said: "Trading remains tough and the first few weeks of the new financial year confirm that demand on the high street remains subdued.
"We have seen nothing to suggest that we need to change our cautious planning assumptions for sales for the full year. Against this background, further progress will take time but we are making a real difference."
Same-store sales at its core Boots the Chemists chain advanced by 2.4 per cent during the year but this figure is expected to fall to 0-2 per cent in the current year.
Total sales increased by 2.7 per cent to £5.47 billion during the year.
Profits were hit by the cost of the restructuring, which saw Boots open 47 new stores during the year and reduce some 2,000 prices by an average of 14 per cent under its Lower Prices You'll Love campaign.
Opening hours were also changed in a bid to lure more customers, with 400 more stores opening on Sundays and bank holidays.
Among other parts of the restructuring, an overhaul of the group's supply chain was now more than 80 per cent complete and an upgrade of the computer system was three-quarters finished.
Profit margins were expected to remain "broadly stable" this year.
John Baillie, analyst at broker SG, was cautious on the group's prospects. "There's no real change in guidance, but it's going to be a challenging future for them," he said.
The sale of Healthcare International unit, whose brands include Clearasil skin products, Nurofen painkillers and Strepsils lozenges, is expected to raise between £1-1.2 billion, most of which will make its way back to shareholders by way of a buyback or special dividend.