CVS Caremark Will No Longer Sell Cigarettes, Other Tobacco Products

CVS Caremark Will No Longer Sell Cigarettes, Other Tobacco Products

CVS Caremark Corporation (NYSE:CVS) has announced that its trademark CVS retail pharmacies will no longer stock tobacco products in a bid to improve its image as a health care provider, strengthen relationships with hospitals and other health care providers, and promote its in-house clinics, report Timothy W. Martin and Mike Esterl for The Wall Street Journal.

Play Quizzes 4

“Cigarettes have no place in an environment where health care is being delivered,” said CVS CEO Larry Merlo. “This is the right decision at the right time as we evolve from a drugstore into a health-care company.”

This Long/ Short Equity Firm Sees A Time-Arbitrage Opportunity In This Pest Control Merger

PestYost Partners was up 0.8% for the first quarter, while the Yost Focused Long Funds lost 5% net. The firm's benchmark, the MSCI World Index, declined by 5.2%. The funds' returns outperformed their benchmark due to their tilt toward value, high exposures to energy and financials and a bias toward quality. In his first-quarter letter Read More

CVS Caremark to lose $2 billion, but gain credibility

CVS Caremark Corporation (NYSE:CVS) is giving up $2 billion in annual revenue, but the decision has already gotten praise from the medical community (and President Obama). “It just doesn’t make sense, if you exist to promote health and you sell one of the major causes of death in the U.S.,” said Otis Brawley, chief medical officer at the American Cancer Society.

While CVS Caremark Corporation (NYSE:CVS) is taking a hit now, cigarette sales continue to drop in the US, and drug stores never had an enormous part of that market anyways (most Americans buy cigarettes at gas stations and convenience stores). In the long-term, this could be a strong strategic move for the company that is trying to market its clinics, staffed by nurse practitioners, as a low cost alternative for less serious ailments. Selling the nation’s leading cause of preventable deaths sends a mixed message and would undermine the brand’s credibility with consumers.

CVS shares fall, not necessarily due to this decision

Other health care companies that deal with CVS Caremark Corporation (NYSE:CVS) have apparently also taken issue with tobacco sales, bringing it up during negotiations and questioning the pharmacy’s seriousness.

“They’re a little bit suspicious of us because we sell cigarettes,” said Troyen A. Brennan, CVS Caremark Corporation (NYSE:CVS)’s chief medical officer. “This move gives us a competitive advantage because it shows our commitment to health care.”

Shares of CVS Caremark Corporation (NYSE:CVS) have fallen 1.4% so far today, but the company’s stock price had been falling before the announcement (along with most other US equities) so it’s not clear if today’s drop is a because of the announcement or if it’s the continuing fallout of disappointing US economic data.

Updated on

Michael has a Bachelor's Degree in mathematics and physics from Boston University and Master's Degree in physics from University of California, San Diego. He has worked as an editor and writer for several magazines. Prior to his career in journalism, Michael Worked in the Peace Corps teaching math and science in South Africa.
Previous article How Much Time You Have Wasted On Facebook – Calculate Now
Next article Microsoft vs. Facebook: The Battle Of Dominance

No posts to display