BY: JOHN MROCH
When CVS announced Feb. 5 that they would no longer be selling tobacco products, I was a little skeptical. Why would a billion-dollar company - that makes $1.5 billion a year in tobacco sales alone, according to USA Today - quit selling cigarettes?
CVS - the nation’s second biggest drug store chain - didn’t exactly quit cigarettes cold turkey, but by October of this year they plan to halt sales of all tobacco products throughout their 7,600 pharmacies, according to latimes.com.
“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," said Larry J. Merlo, President and CEO, in a CVS Caremark press release. "Put simply, the sale of tobacco products is inconsistent with our purpose."
Maybe for once a company didn’t make a decision based on a gain in earnings, but rather because of peoples’ better interests? The decision puts CVS on the front line of making the United States a healthier place.
Within a week of announcing their ban on tobacco, CVS Caremark company shares rose 2.3 percent, according to an article on TIME.com.
So, the fact that CVS is making some money while improving the public’s health make the decision seem like a no brainer. It also seems that timing could not have been better for CVS to break the news.
The same TIME.com article also said that, “The earnings report released Tuesday shows the company’s profits in the last quarter of 2013 increased $140 million from the same period a year ago, and revenue hit $32.8 billion.”
The question is: Are these earnings only temporary, or will they be consistently growing?
Public support of CVS’ decision from President Obama may be what is helping to increase share prices, as well.
"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, taken from USAToday.com
Support from Health and Human Services Secretary Kathleen Sebelius, and billionaire philanthropist - and also the former mayor of New York - Michael Bloomberg isn’t hurting either.
The mass-media attention CVS has been receiving over the past week may also be a direct cause to the recent rise in company shares.
With the increase in the company’s revenue, CVS has allowed themselves time to cut the losses of tobacco sales and instead focus on selling healthcare-related items. According to the nytimes.com, CVS will also focus on a, “smoking cessation program that it is starting this spring with the goal of getting half a million Americans to stop smoking.”