Welcome to the newest edition of The Why. “Why don’t other drug stores stop selling cigarettes like CVS?” you ask? That’s a good question. Timely too. (Besides, it beats answering the question: “Why does my brother always smell his fingers after he scratches himself?”)
For those of you who don’t smoke or follow business news, CVS Health Corp. has quit tobacco. Why don’t its competitors do the same? Well, according to various sources such as Kelly Gilblom and Michelle Fay Cortez of the Bloomberg News, Walgreen Co. and Rite Aid Corp. “say that helping tobacco users quit” should be the true goal and “that they don’t plan to follow CVS and quit selling cigarettes, cigars and chewing tobacco.”
CVS still reportedly made money last quarter because of its “pharmacy services unit.” The competition, however, doesn’t have “pharmacy benefit management units.” According to a portfolio manager at Gabelli Funds, Jeff Jonas, “(t)hey’re just not performing as well, so they . . . need those sales. Rite Aid needs it because of all the debt they have to service. Walgreen has some turmoil around the Alliance Boots acquisition.”
Mind you, Rite Aid and Walgreen say they’re taking steps to fight tobacco use. They do not as of yet however have a solid plan to cease selling tobacco. Furthermore, the two corporations have announced publicly that is “better to stop nicotine addiction at its source, rather than make it more difficult to satisfy cravings.”
In an e-mail statement to the press Walgreen stated: “We believe that if the goal is to truly reduce tobacco use in America, then the most effective thing retail pharmacies can do is address the root causes and help smokers quit.”
Ashley Flower, a spokeswoman for Rite Aid told reporters that the company is constantly evaluating the products they do and do not carry. She would not, however, specifically answer the question regarding the sale of cigarettes.
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