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WOONSOCKET, R.I. – One drug store giant's decision to stop selling tobacco products could cost it $2 billion a year.
According to a report by Bloomberg Businessweek, CVS Caremark Corp. executives confirmed the estimated figure during an earnings call early this week.
The company reported font-end sales of CVS stores, where cigarettes are sold, dropped 0.4 percent in the second quarter. Some locations are still selling cigarettes while CVS has set Oct. 1 as the day to remove all tobacco products from its store shelves. The slight drop in sales could be driven by stores that have stopped replenishing inventory, the news outlet reported.
CVS is not only facing lost revenue from the sale of cigarettes, but also revenue from other items adult smokers buy when they are in the store. However, the news outlet said the estimated $2-billion loss won't put CVS in financial trouble. CVS is a $126-billion company and the country's largest provider of prescription drugs. The company’s profit last quarter rose 11 percent to $1.25 billion while total revenue rose 11 percent to $34.6 billion.
In addition to pulling tobacco products from its stores, CVS is holding off stocking electronic cigarettes. The company has previously stated it is waiting for guidance from Food and Drug Administration before it makes a decision on e-cigarettes.
CVS announced its tobacco ban in early February. The decision came as the retailer readied a smoking cessation program this spring. The program includes information and treatment on smoking cessation at CVS/pharmacy and MinuteClinic, along with online resources.
Woonsocket-based CVS Caremark has more than 7,600 CVS/pharmacy stores across the United States.