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CVS Tobacco Products Sales To End Despite $2B in Annual Revenue

CVS Tobacco Products Sales To End Despite $2B in Annual Revenue

By    |   Wednesday, 05 February 2014 01:23 PM

Although they generate $2 billion a year in revenue, sales of tobacco products by CVS will be coming to an end by October.

On Wednesday, the company announced its decision to voluntarily stop selling tobacco products at its 7,600 stores, thereby becoming the first U.S. drugstore chain to take cigarettes off the shelf, Reuters reported.

"Ending the sale of cigarettes and tobacco products at CVS/pharmacy is the right thing for us to do for our customers and our company to help people on their path to better health," Larry J. Merlo, president and CEO of CVS Caremark, said in a statement. "Put simply, the sale of tobacco products is inconsistent with our purpose."

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According to CVS, the decision will cost the drugstore chain approximately $2 billion in annual sales and between 6 and 9 cents of profit per share this year, Reuters reported.

To make up for the anticipated revenue loss, CVS plans to launch additional smoking cessation programs at its pharmacies and use their anti-tobacco stance to land more corporate contracts in 2014.

Considering that CVS is the No. 2 U.S. drugstore chain, the decision to drop tobacco products from its shelves has public health experts hopeful that others might follow in their lead.

"This is an important, bold public health decision by a major retail pharmacy to act on the long understood reality that blending providing health care and providing cigarettes just doesn't match," said Dr. Richard Wender, chief cancer control officer at the American Cancer Society, CNN reported.

President Barack Obama, a former smoker, also welcomed CVS’s decision to stop selling the tobacco products.

"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," Obama said in a statement Wednesday.

Whether or not Walgreens, the nation’s No. 1 drugstore with its 8,582 locations, will follow suit remains unclear.

In a statement released after CVS’s announcement, Walgreens spokesman Jim Graham said, "we have been evaluating this product category for some time to balance the choices our customers expect from us with their ongoing health needs," CNN reported.

"We will continue to evaluate the choice of products our customers want, while also helping to educate them and providing smoking-cessation products and alternatives that help to reduce the demand for tobacco products," Graham added.

In response to CVS’ decision to stop selling tobacco products, R.J. Reynolds Tobacco Co. spokesman David Howard said his company respected CVS’ decision and "would work with them as they transition out of the tobacco category in the coming months."

With its decision to refrain from selling tobacco products, CVS joins the ranks of other retailers such as Target, which stopped selling tobacco in 1996, and the East Coast supermarket chain Wegmans Food Markets, which did so in 2008.

Although adult smoking rates have fallen from 43 percent of Americans in 1965 to the current 18 percent, smoking remains the leading cause of preventable death in the United States, killing more than 480,000 people each year, according to Reuters.

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Although they generate $2 billion a year in revenue, sales of tobacco products by CVS will be coming to an end by October.
Wednesday, 05 February 2014 01:23 PM
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