CVS Caremark, operator of CVS stores, announced that it would no longer sell cigarettes
in its stores. The company estimates that it will lose $2 billion in
annual revenue and six to nine cents per share in EPS. In addition to
the lost sales from cigarettes, CVS will lose sales of other items that
cigarette purchasers would buy at the store. The decision by CVS is
likely part of a larger move as pharmacies are trying to become health
care providers. The company's stock dropped about 1.8 percent, although
it did recover some. As one analyst put it "Good for them that they're
taking a stand, and I'm selling my CVS stock."
The
statement made by CVS indicates the company made the decision for
ethical and health reasons. That raises the question of how far CVS will
go. While we are not stating that cigarettes are good for you, one
article discusses five other items
that CVS sells that are unhealthy. For example, CVS still sells soda
(or pop as it is more accurately known by Northerners.) Recent studies
have found that soda increases the risk of diabetes by 22 percent and the risk of cardiovascular disease by a third.
So, should investors be concerned that CVS will state that the ethical
standards of the company are such that it will stop selling these other
items as well?
