HEALTH and beauty retailer Boots showed how the impact of increasing high street competition had hit its sales in its last financial year.

Boots, which has seen grocery giants such as Tesco and Asda take more of its market share, announced profits before tax and one-off costs of £581.1m, compared with £570.8m a year earlier.

Sales in its core Boots the Chemists stores were up just 0.3 per cent in the 12 months to March 31 - and down 0.2 per cent on a like-for-like basis.

Chief executive Steve Russell said the results demonstrated the high street brand's "resilience".

He said: "Boots the Chemist performed well in the face of increasing competition.

"We are going through a lot of change, but we believe customers like what they are seeing.

"Looking ahead, health and beauty sales will move ahead and margin improvement will continue. We are confident of the outcome for the year."

The company announced plans to open a range of Pure Beauty stores aimed at the premium end of the cosmetics and fragrance market.

The first store is due to open in Covent Garden, London, in September, with scope for a possible 65 Pure Beauty stores, featuring a strong representation of Estee Lauder brands.

Following the removal of retail price maintenance on over-the-counter medicines earlier this month, Boots confirmed it expected the court decision to cost it between £15m and £20m in the next year.

But it said it had been prepared for the ruling: "We are responding vigorously to competitive activity and expect to increase market share in an expanded market in the medium term."

Despite the sluggish sales growth, operating profit for Boots the Chemist stores prior to exceptional items rose seven per cent to £526.1m after a move to more higher margin business.

Health and beauty sales improved by 3.4 per cent, while the company's market share also improved in fragrance, toiletries and electrical products.

The planned exit from non-core leisure merchandise reduced sales by two per cent over the year, Boots said.

The group said results continued to disappoint at Boots Opticians, where sales rose 0.2 per cent to £196.1m but profit fell to £4m from £11.2m a year earlier.

Boots said: "The optical market remains fiercely competitive and market growth has been low."

It said higher levels of discounting, advertising and promotion had produced the marginal sales lift.

Boots Wellbeing Service, which includes dentistry, chiropody and hearing care services, saw sales rise to £8.5m from £1.9m, but operating losses widened to £20.7m after a period of rapid expansion.

The dental care division has grown from six to 30 practices, while the number of foot care practices was expected to reach 41 by next month.

Operating profits at car and cycle outlet Halfords fell 18 per cent to £37m after 52 of its stores were converted into its new Arcade format.

In total, the group recorded a pre-tax profit after one-off costs of £492.2m, compared with £561.7m a year earlier.

Shareholders will receive a total dividend of 26.3p, an improvement of 4.4 per cent on last year.