CVS plans to stop selling tobacco

Is this just a publicity stunt? Are they losing money on sales? Will they be able to continue this in the long-term?

Maybe, just maybe, they are doing the right thing, and assuming that the competition will all end up following suit.

It will cut off $2 billion in sales from their bottom line and 17 cents a share of annual profit.

Also pointed out in that article - CVS is growing in the retail walk-in healthcare biz. It is hard to position yourself to grow there, as a healthcare provider, while also selling tobacco products.

Walgreens is proudly proclaiming they will continue to sell tobacco products.

Hopefully, they’ll get rid of the homeopathic crap next.

I doubt they’re losing money on tobacco sales. They’ve probably decided that the publicity and goodwill they’ll get from this, and perhaps an improvement of their branding, will be worth the cost.

They had $123 billion in revenue and a profit of almost $4 billion in 2012, so yes, they can afford to do it.

San Francisco already forces drug stores to do this. This might not generally affect me, but I don’t like the idea of implying that humans are lazy dumbasses who will quit smoking when it becomes inconvenient to them. Walgreen’s is better anyway, as CVS is a loyalty program store. Long’s was better RIP. Walgreen’s seems to sell booze less frequently though.

Are they still going to sell patches and gum? The article starts off about cigarettes and then generalizes to tobacco.

The homeopathy: I don’t mind if they sell it as long as it is clearly marked as such. Because I bet they make money off that.

Dollar cigarettes? Basic brand is too fancy? Are they covered in Cyrillic and filled with fiberglass or something?

It seems odd to me that Walgreens so triumphantly claims to be “at the corner or happy and healthy”, but sells alcohol and tobacco. The two cannot be more polarized.

I’m pleased at the discontinuation, publicity stunt or not.

I’m sure it will work out fine for them. Target stopped selling tobacco products in 1996 and they seem to be doing fine.

One major aspect of a CVS store is a convenience store–anyone care to hazard a guess as to what percent of their square footage is not healthcare related? So I would expect a significant decline in their convenience store type traffic.

I predict the decision will be reversed within a couple years.

Teen smoking rates are less than a third of what they were in the 90s, 5% for HS sophomores last I saw. Cigarette sales will fall off and a lot in coming years.

It was just a matter of time they and all drug stores will stop selling it. It’s in conflict with their brand and image to the public. You can’t claim to be a place to help with your health concerns at the same time making you sick. I think CVS might be taking the company to the next level in health care and using the brand to offer other services or license it’s name for use broader health care than being just a retail store. This also reduces the liability for the company about being fined or sued for selling to underaged consumers. Walgreens will follow in this too, they are just late to doing so. CVS is doing forward-thinking as a company because they don’t want to end up being a huge media story in health of why they are selling poison at the same time they are selling remedies for the poison.

At the end of the day, I’m glad they are doing this and can’t wait for the rest of the companies to do the same.

I thought the same thing when I heard the news! A few weeks back I was in a Walgreens and while checking out it did occur to me that it was odd for a place that advertised itself to be at the corner of health and happiness to be selling tobacco products.

The loss of conveience store product sales bought by people coming to buy tobacco products (nicotine gum, etc. is not cosidered a tobacco product; they intend to increase sales of smoking cessation products and even services, see my earlier link) is factored into the losses already calculated.

OTOH being known as a place that a person who has recently quit can go and not see their temptation being in their face may increase convenience store appeal to that demographic.

This is an intelligent long term play. Cigarette revenue is nothing to … cough at, but it is a decreasing stream and has a lower profit margin than most other products sold there. Their growth opportunity is as a healthcare company (remember they are CVC-Caremark) and this places them in better position to grow there. Snubbing out the smouldering butt of a lower profit margin line of business is more than worth it if it increases your chances of growing in your key future growth direction. When discussing partnerships with various healthcare delivery sytems, something CVS-Caremark has been doing, having done this will be a competive edge.

Sounds like a good move.

One point: As I watch local news every morning for the weather predictions, I get exposed to lots of local crime stories. Cigarettes are one of the major targets for smash & grab thieves. They are locked away in many stores. Just not selling them will probably simplify matters.

But I still like Walgreen’s better–most CVS’s just seem a bit crummy to me. (There’s one in downtown Houston–located in the old Neiman Marcus building.) So I will continue to not buy ciggies at Walgreen’s…

Some details on how giving a little revenue positions them for better growthfrom the WSJ:

Some local Boards of Health are prohibiting the sale of tobacco products in pharmacies.

Great idea, and I hope every other pharmacy follows suit. CVS just might get more of my business because of this. They are on my way home from work, as is Walgreen’s.

I just quit smoking last month, and I bought most of my cigarettes at the CVS near my house. I don’t have a problem going into a store that sells cigarettes (hell, I’d have to buy an electric car if I did) but it’s nice to see a megacorp backing up its marketing pablum (no matter that they still have aisles full of alcohol and candy.)

This will be a very interesting social experiment.

I wonder how investors feel about this? With 2 billion in lost revenue, it must be making some of them nervous.

Share prices dropped (very) slightly after yesterday’s press release but seem to have recovered.