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?
