CVS announced it will drop all tobacco products -- including smokeless and electronic -- by October at all of its locations.
"Put simply, the sale of tobacco products is inconsistent with our purpose," said Larry Merlo, CVS Chief Executive. "[Not selling tobacco] is the right thing for us to do for our customers and our company to help people on their path to better health."
By "butting out" in nearly 7,600 locations nationwide, the drugstore chain stands to lose roughly $2 billion, or 1.5 percent of its total sales. But in a competitive pharmacy chain store market differentiation is important. CVS's strategic move seems to have earned goodwill from much of the American public.
This morning President Obama applauded the drugstore's decision. Even more acclaim came from Twitter users who mentioned "CVS" or "#cvsquits" nearly 131,000 times by 5:00 p.m. on Wednesday.
I took issue with one tweet from Jeremy Olshan, the personal finance editor of the Wall Street Journal Digital Network/Marketwatch. Olshan tweeted:
"If $CVS will no longer sell cigarettes for health reasons, why not drop soda, potato chips, and cake from shelves?"
While CVS is a drug store with the goal of helping customers lead healthier lifestyles, it is still a business. Since tobacco sales only make up 1.5 percent of total sales, dropping tobacco products is more painless than one might think. However comparing cigarettes to soda and candy hardly seems fair. Remember Jeremy, soda, candy and potato chips do not have to print health warnings on their products.
CVS Caremark Corp (NYSE: CVS) closed at $65.44 on Wednesday, down about one percent from yesterday's close. The stock climbed from today's low of $64.95, likely due to investors getting more comfortable with the long term prospects of the drugstore's decision.
Mickey Gorman
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