BJ's Wholesale Club has decided to close all of its pharmacies.
The decision to get out of the pharmacy business was made, according to interim CEO Herb Zarkin, for a number of reasons. These included the company getting into pharmacy at a later stage (2002) than its primary competitors and not having conveniently located stores (46 of BJ's 171 stores have a pharmacy) to make it easier for consumers to pick up their prescription medicines.
"We haven't seen the [prescriptions] grow on a regular basis," Zarkin said. "It just didn't make a lot of sense for us to keep on putting the investment in."
BJ's has also felt the effect of increased price competition, which started when Wal-Mart began pricing some older generics at $4, as well as dealing with reduced reimbursement rates from Medicare.
The announcement BJ's is shuttering its pharmacies is likely to increase speculation of a company sale.
"There's a very legitimate case for it being sold -- they're not big enough to compete with the Sam's and Costcos," David Strasser, an analyst with Banc of America Securities, told the Boston Globe.
Discussion Question: What is your reaction to BJ's closing its pharmacies?
Has BJ's made the right decision by getting out of the pharmacy business?