In a move that will clearly have major financial implications, CVS Caremark Corp will stop selling all tobacco products at their 7600 stores by October 1, 2014. This will make CVS the first national drugstore chain in the US that won’t have cigarettes on its shelves.
Everyone from the President to the nation’s health care workers praised the decision. President Obama, a former smoker, said that the decision will help with efforts to “reduce tobacco-related deaths, cancer, and heart disease, as well as bring down healthcare costs.”
Certainly, CVS expects that its decision will hurt its profits in the beginning, but they hope that the decision will boost their appeal as a healthcare provider. They hope to recoup some of the revenue loss by signing up customers for smoking cessation programs and by continuing with their pharmacy healthcare provider services. They have more than 800 MinuteClinic locations where people can come to a walk-in clinic.
While CVS is optimistic, analysts are nervous about the short-term pain. CVS shares fell 1%, while two companies that plan to continue offering cigarettes rose. Walgreen Co.’s rose 3.9% and Rite Aid Corp. rose 2%.
As the U.S. Centers for Disease Control and Prevention Director Thomas Frieden told Reuters, “I think CVS recognized that it was just paradoxical to be both a seller of deadly products and a healthcare provider.”
Some US cities have already taken the lead on this initiative, banning the sale of tobacco products in pharmacies. This includes Boston and San Francisco. As Alexandra von Plato, president and global chief creative officer of Publicis Healthcare Communications Group said, “This is a trend we’re going to see many, many retailers and food companies jump on.”