CVS may not be the first to stop selling tobacco products, but the drugstore chain's announcement is big for no other reason than the sheer size of the company's tobacco business. CVS estimates it will lose roughly $2 billion in revenues from tobacco users on an annual basis. The chain anticipates the decision will impact 2014 earnings somewhere between six and nine cents per share.
Ending sales of tobacco, according to Larry Merlo, president and CEO, CVS Caremark, was the right move for the chain. "Put simply, the sale of tobacco products is inconsistent with our purpose," he said in a statement.
CVS received praise from President Obama for its decision. "As one of the largest retailers and pharmacies in America, CVS Caremark sets a powerful example, and 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."
In addition to ending the sales of tobacco in its stores, CVS has pledged to step up its smoking cessation program. According to the company, the program, which will be launched in the spring, will include information and treatment on smoking cessation at the chain's pharmacy and MinuteClinic locations as well as online. Members of the CVS Caremark pharmacy benefit management plan will also have programs in place to help them quit the tobacco habit.
CVS told RetailWire it does not currently sell e-cigarettes. At the time this story was published, there was no response as to whether it would add e-cigarettes as a component of the company's smoking cessation program going forward.
Will CVS's decision to stop selling tobacco be a net positive or negative for the company's business when we look back in five years?