BOOTS spends time stressing the growth potential in its smaller businesses and in Europe. The City, however, remains convinced that its chemists, still more than 60 per cent of the business, are all that counts, as the 2.5 per cent fall in its share price on the back of yesterday's trading statement shows.

That looks a little churlish. The 4.2 per cent rise in sales at the chemist chain may be below that achieved last year but it is still not bad, given that the current quarter excluded Easter, price deflation was perhaps 1 per cent and it rained almost non-stop throughout May. Its success has been as much about margin improvement as sales growth, and there is no sign of pressure there.

Instead, it is the smaller businesses that still look weak. The 19.4 per cent Childrens World increase was almost all new space, Boots Opticians and AG Stanley suffered like-for-like falls, while Do It All still seems to be defying remedial action.

That said, yesterday's fall puts it on a market rating, and a 30 per cent discount to Marks & Spencer. The strength of its chemist chain makes it worth more than that.

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