Boots could close up to 200 stores over the next two years, resulting in the loss of hundreds of jobs, as the retailer battles competition from discounters and online specialists.

The health and beauty chain is reviewing its portfolio of nearly 2,500 shops as its US parent company attempts to cut $1bn (£790bn) in costs worldwide, partly to offer customers lower prices and better services.

Up to 350 jobs are already on the line at Boots’ Nottingham head office as part of cost-cutting plans at the chain, where pre-tax profits dived by £100m and sales fell by more than 2% to £6.8bn in the year to last August.

The potential closures come as the UK high street is being dramatically reshaped by the move to online shopping and a general slowdown in spending on items people may not need.

A string of traditional high street favourites, including Debenhams, House of Fraser, New Look and Mothercare, have been forced to close stores and restructure their finances as changing shopping trends combine with rising costs from higher minimum wages, soaring business rates and more expensive imports linked to the drop in the value of the pound since the Brexit vote.

Next week, Sir Philip Green’s Arcadia group, which includes Topshop through to Burton, will ask creditors to approve a rescue plan under which about 50 of its 566 UK stores will close. Green is also asking for rent cuts of up to 75% on nearly 200 shops.

Patrick O’Brien, UK retail research director at GlobalData, said Boots was under pressure as its market share was being eaten away by discounters such as Savers, Poundland and Home Bargains and fashion retailer Primark, which have all expanded their health and beauty ranges. Online firms Amazon and FeelUnique are also winning Boots’ traditional business.

Online retailers have been better at picking up on new brands that have rapidly risen to prominence in a market increasingly driven by social media influencers.

O’Brien said Boots’ day-to-day customers were trading down to the discounters, and its shops were not an attractive destination for people looking to spend on a treat or an expensive gift. “They [Boots] are being picked off by more agile players,” he said.

Walgreen Boots Alliance, its US-listed owner, said last month that its review of closures would focus on “low-performing stores and opportunities for consolidation”.

Industry insiders said Boots had long needed to move out of small stores on declining high streets that were unlikely to be profitable and that closing 10% of the chain would make sense.

“Beauty is the cash cow for them. Smaller stores tend to [attract] the functional older shopper with basic health needs,” said Jonathan De Mello, head of retail consultancy at the property advisory firm Harper Dennis Hobbs.

Sources close to Boots told Sky News, which first reported that 200 outlets were under review, that a significant number of UK stores were likely to be closed but a final decision had yet to be made.

Boots said it did not have a major programme of store closures envisaged. But it added: “As you’d expect we always review underperforming stores and seek out opportunities for consolidation.

“As is natural with a business of our size, we have stores opening, closing and relocating on a regular basis, but we have had around 2,500 stores open for several years now.”