CVS/pharmacy stores across the country will cease the sales of cigarettes and other tobacco products by Oct. 1, parent company CVS Caremark announced this morning with the headline “This is the right thing to do.”
“Ending the sale of cigarettes and tobacco products at CVS/pharmacy is the right thing for us to do for our customers and our company to help people on their path to better health,” said CVS Caremark’s president and CEO, Larry J. Merlo. “Put simply, the sale of tobacco products is inconsistent with our purpose.”
The decision will remove tobacco from approximately 7,600 CVS/pharmacy stores and is expected to cost the company around $2 billion in yearly revenues. The company claims, however, in a press release that they have “identified incremental opportunities that are expected to offset the profitability impact.”
What these offsets will entail is unclear, but CVS’s chief medical officer Troyen Brennan believes that dropping tobacco will give the chain a “competitive advantage” when it comes to making deals with physicians, according to Forbes.
Also, CVS says they will launch a program later this spring to help customers quit smoking.
How much will this impact the company’s profits? Forbes says that it’s up in the air:
“The $2 billion in annual sales lost is only 1.6% of total revenue. In turn, CVS says that this will pressure earnings by 17 cents per share, or 40%, on an annual basis. But because the removal won’t have fully happened until October, that will only hit this year’s earnings by 6 to 9 cents per share. And CVS says it can make up those costs, maintaining its guidance, although that earnings coverage has to come from somewhere. The company is making a bold bet on rebranding itself as being not just a store, but a healthcare company.”
President Obama lauded the move in a statement, saying that “today’s decision will help advance my Administration’s efforts to reduce tobacco-related deaths, cancer, and heart disease, as well as bring down health care costs – ultimately saving lives and protecting untold numbers of families from pain and heartbreak for years to come.”
For more on the country’s cigarette habits, watch Judy Woodruff’s conversation with the FDA’s Kathy Crosby about a new ad campaign that hopes to curb teen smoking, which aired Tuesday on the PBS NewsHour. Also, Acting Surgeon General Boris Lushniak spoke to Hari Sreenivasan on PBS NewsHour Weekend in January about the state of smoking in America.