Skip to comments.CVS Caremark plans to stop tobacco products sales
Posted on 02/05/2014 5:01:07 AM PST by Red in Blue PA
CVS Caremark is kicking the habit of selling tobacco products at its more than 7,600 drugstores nationwide as it focuses more on providing health care.
The nation's second-largest drugstore chain said Wednesday that it will phase out cigarettes, cigars and chewing tobacco by Oct. 1, a move that will cost about $2 billion in annual revenue but won't affect its 2014 earnings forecast. CVS Caremark leaders say removing tobacco will help them grow the company's business of working with doctors, hospitals and other care providers to improve customers' health.
(Excerpt) Read more at finance.yahoo.com ...
This is about government control; nothing less. If the government truly was interested in the public health, suppressors would be mandatory for all shooters.
Once there are no smokers to eradicate, look for the government (followed by business) to go after caffeine.
And on. And on.
This will free up a lot of shelf space for marijuana products too!
Government control? I do not think this is an example of government control, unless this private company was offered tax breaks for halting the sale of tobacco products, or was threatened by the government with punitive action if they did not stop selling tobacco. I have seen no evidence of either.
CVS is perfectly within their rights to sell, or not sell, whatever [legal] products they wish to sell; and I am within my rights to choose somewhere else to shop when their “social correctness” irritates me.
Some ideologue has blown smoke up their corporate keester telling them it won’t hurt their bottom line. BS. It makes no difference about ‘intereacting with’, ‘working with’, or ‘colluding with’ doctors, hospitals or other organizations seems to be a hunky-dory-super-good-time-GI Joe thing.
The bottom line is patients will look at cost first, ease of getting prescriptions filled, and whether or not it takes a long time to get them filled. Getting rid of the tobacco products doesn’t seem to have any impact on these.
Forgot to ad in my OP, this is about business pandering to government initiatives. The CEO should be canned for this, as should any CEO who does this sort o thing.
Coca-Cola got on the obesity wagon with the govt and check their stock out for the past few years. This is a stock killer and CVS shareholders ought to take note!
Good point! It’s probably cheaper than putting an addition on each store...
See Post 5 for clarification.
This is about businesses pandering to government and their “initiatives”. Coca-Cola id the same thing with obesity an it killed their stock price. Any CEO who engages in this morality play out to be shown the door.
LOL, you got it!
True. I don’t think I’ve ever went into a drug store to get a pack of smokes. I doubt I would if I needed to. No telling how long they would have been setting on the shelve, because chances are, hardly anyone else goes to a pharmacy for smokes either.
I wonder if they are going to stop selling alcohol too? Here in my town, there are 3 CVS stores that sell the majority of alcohol in this town. Will they also go toward being healthy and stop alcohol sales? Probably not, they have to make a lot of money doing it.
Okay. I’ll buy that.
With any luck, CVS stock will follow the Coca-Cola route, CVS will see the error of their ways, and they will reverse the decision.
I've read the the gross retail profit margin on tobacco products is about 15% and net about 6% -- the gov't take on the transaction is much, much higher.
They probably found a more productive use for their shelf space.
And they sell the “good stuff”, too, I’ll bet.
What’s the word?
What’s the price?
... I have no idea, I haven’t bought a bottle of Thunderbird since I was about 16.
If it is in the interest of health concerns that they do this, then I assume they will also take measures to eliminate sale of abortifacient substances.
CVS alcohol prices are considerably cheaper than the liquor stores. The other alcohol competitors include WalMart, Sams Club, Kroger, Target and Marsh.
How many people die from the side effects of prescription drugs every year?
What about banning sugars? After all, a few people may become diabetic because they cannot control themselves.
An caffeine is not the healthiest product out there. Gotta stop that.
What about makeup for women? It is claimed that some cause cancer.
By the time we are done saving the world, CVS will have a total of 8 SKU’s.
What a pathetic excuse for a CEO.
Agreed. However, I did find it interesting that Obama had a prepared statement that came out within 10 minutes of the announcement. I think CVS caved to gov’t pressure.
The government didn’t force them to do this. It’s their choice. Should they be forced to sell them?
Ex smoker. Go ahead and smoke. I won’t share un filtered indoor airspace with you. Not because it’s dangerous but because it is no longer a nice smell to me. Before they banned smoking in Vegas casinos I was pleasantly surprised that there was almost no smoke smell. Why they named it I don’t understand.
If smoking is that dangerous tobacco products should be banned. But they won’t do that as it is a huge government cash cow. Hypocrites.
Btw. What does surpressors have to do with anything. Unless I’m hunting I wear plugs or head phones. It is every range around here’s cardinal rule. When I was a kid it wasn’t. But it is a good idea for all shooters.
I hear the numbers for prescription drugs addiction is very high.
Funny, I am old enough to remember when, if some Christian type, made such an announcement he was sneered at as some kind of out of it bluenose.
Then this is really about the government and it’s role, right? Corporations exist to produce wealth for their investors; if that involves them pandering to the government, even for things that the government shouldn’t be doing, then they are just acting within their nature.
The way I see it this is how things are supposed to work: CVS is looking at evolving their business model and tobacco doesn’t fit with that. So tobaccois going away. There will still be places where people can buy tobacco, because there’s still a market for it. Hopefully it’ll actually drive tobacco purchasers to their local mom and pop tobaccanist shop.
You don’t think there is any govt pressure on businesses in the background to get on board with these types of moves????
Check out Coca-Cola. They have obesity initiatives which are killing the stock price, yet they continue anyway. This is about companies putting govt initiatives above the shareholders.
Any time I see this, I sell immediately. IT NEVER WORKS.
The CEO should be fired!
I will never spend another dime there!
That’s between Coke and it’s shareholders, isn’t it?
19% of the population smokes. CVS is saying to 19% of the population that they don’t want their business. (and this does not include the business they will lose from people like me who are non-smokers but are pi&&ed t these types of moves)
If you think that is a good move in any way, then I have a bridge to sell you.
Whatever the case ... it’s CVS’ right to sell or not sell any particular product.
The govt is all for “healthy living” unless doing something such as making suppressors mandatory takes away from their power. I thought that would be obvious.
It sounds to me that they’re moving from a low margin offering (tobacco) to a higher margin one (health services). They’re saying that initially the increased revenue from the higher margin one will completly offset the los revenue from the ditched lower margin one. And in the long term, as tobacco use decreases while the need for health services increases, it’ll be more profitable.
In the absence of the details of whatever market research they have to support the decision, that’s not illogical or unreasonable.
Not sure I agree with you.
This appears to be CVS making a strategic call, and deciding that not selling a carcinogen will bring in more sales, than selling one will.
If I am wrong then I stand down, but this is what appears to me, to be a simple marketing decision.
As a (former) smoker I am in favor of CVS’ call on this.
Have a CVS store near me. Been told their average daily gross, excluding their pharmacy, is around $8,000.
Eliminating tobacco sales is certain to hurt this number.
Good analysis. Products come and go but the purpose of the BoD, Executive Mgmt, etc
is to make the largest profit margin that they can for the investors in line with the corporate
goals. That should be the guiding decision.
Would you prefer that the government force CVS to sell cigarettes?
Check Coca-Cola’s stock price if you think this will help CVS. Coke jumped into bed with the govt for their obesity initiative, and the stock has been a horrid performed during one of the longest runs of the stock market.
The CEO decided to serve the interests of the govt instead of the shareholders. IT IS THE DUTY OF THE CEO TO BE MORALITY NEUTRAL.
I can't believe that cigarette sales add a lot to their bottom line. They can't be a high margin item and I doubt that they comprise a lot of their total sales. But by loudly and publicly announcing that they won't sell them anymore CVS is reaping millions in free, positive publicity and probably not losing much in the way of income.
It’s the duty of the CEO to run the company in a manner that provides good return on the investments made by the shareholders.
If the CEO fails to do this, then the action to make any sort of a correction is in the hands of the shareholders.
I don’t see an apple apples comparison between CVS and Coke here anyways. Tobacco use is declining. The need for health services is increasing and will continue to do so. The former is low margin and the latter high margin, with the prospects of breakeven the first year and then increased revenue during the following years.
On that basis alone it looks like a logical and reasonable business move.
I know they had a recent CEO change and I think a woman is at the helm now.
Pissing off 19% of your customer base is never a good thing, no matter how you cut it.
And for every person like you there's probably 10 who are saying this morning, "Great for CVS. I'm going to start shopping there."
This was a decision made by the CEO. I have no problem with it. No government involvement whatsoever. I am for smokers rights 100 percent, but I am also a person who believe that stores can sell what they want.
You're assuming they buy their cigarettes at CVS instead of a grocery store or convenience store. Really, who goes to CVS unless you're looking to fill a prescription or buy aspirin?
There are plenty of places still left to buy cigarettes and other tobacco products. And around my parts and yours, CVS and Walgreens, Rite Aid and grocery stores like Weis and Giant are way overpriced anyway; better to buy them at Sheetz and Rutters stores. And a lot of other big chain retailers dont sell cigarettes anymore if they ever did; Wal-Mart, Target, Wegmans for instance and they still seem to do a booming business.
Around here in PA, as you must already know, you cant buy wine or spirits, i.e. liquor except from State Stores (which are horrible BTW) and they dont sell any tobacco products and except for a very few places, you can only buy beer by the case from distributors and most of them dont sell cigarettes - beer and only beer. (And yes, this is sometimes why I do miss living in Maryland.)
But in recent years a lot of tobacco stores have opened and they not only sell cigarettes at discounted prices but also have a large selection of HQ cigars and pipe tobacco.
Why would a smoker even want to buy cigarettes from CVS? The last time I went there I stood in line what seemed like forever to get waited on. The first and only time I got an RX filled there, they screwed it up.
They will get the message loud an clear that CVS does not value their business, even if they do not purchase them there.
“The CEO decided to serve the interests of the govt instead of the shareholders. IT IS THE DUTY OF THE CEO TO BE MORALITY NEUTRAL.”
No. As others have pointed out, the CEO chose to expand a higher margin (the health clinics), at the expense of a low margin, commodity product. There is no evidence of govt pressure (if this was about govt pressure, it would have happened decades ago), and this is morality neutral.
Also, to the extent Coke’s stock has fallen, it has been largely due to falling sales. Soft drink sales in general have been down, largely because consumers have become more health conscious. Pointing to their obesity initiative as the source of the stock drop is a huge stretch.
I agree it's ridiculous. I think CVS here is trying to get PC publicity.
Hey, they sell narcotics at CVS. What's the problem with tobacco?