Boots and Sainsbury's are ending their health and beauty joint venture after a row over how to divide up the revenues from the chemist stores within the supermarket chain.

Steve Russell, the embattled Boots chief executive, insisted the trial of nine stores within stores had "worked well" and that sales of health and beauty products were "in line with expectations".

"However, we could not agree on commercial terms of roll-out," said Mr Russell, whose successor is being sought by the company.

The idea was for Boots to become responsible for Sainsbury's health and beauty products.

But since beginning the trial in October 2001, both groups have been distracted by other issues. The Boots management, particularly Mr Russell, has been struggling to retain credibility while in recent weeks Sainsbury's executives have been diverted by the battle for control of Safeway.

Sources close to the supermarket chain said yesterday: "Sainsbury's decided it wasn't worth the time and energy."

Once regarded as a potential bidder for Boots, Sainsbury's is thought to have concluded that the concept could not be established nationally on a commercially viable basis.

Boots has suffered several setbacks in attempting to expand outside the core, and increasingly competitive, area of chemist stores.

Mr Russell's attempt to expand though 65 Pure Beauty stores was abandoned after six were opened.

He said yesterday that Boots would now accelerate its plan for store openings and double its presence on the "edge of town" - where it currently has 77 stores - over the next three years.

Boots recently reported a better than expected rise in sales over Christmas and has not only come under pressure from supermarkets to expand into health and beauty but also faces fresh challenges from the decision by the office of fair trading to open up the market for pharmacies.

Its shares rose 13.5p to 535.5p yesterday.

Guardian Unlimited ' Guardian Newspapers Limited 2001

Tweet