Doing the right thing first is seldom easy. CVS Caremark announced hat it would become the first national pharmacy chain to stop selling cigarettes along with other cigarettes and tobacco products altogether. The company’s chief executive, Larry J. Merlo, said “We came to the decision that cigarettes and providing health care just don’t go together in the same setting,” based on the New York Times.
This is a gutsy, principled and potentially expensive move. It’s especially gutsy, and controversial, to get a publicly traded company.
The primary estimates are that the decision will cost https://Locationsnearmenow.Net/CVS-Near-Me-And-CVS-Hours/ about $2 billion in sales, or about 17 cents per share of stock, annually. I suspect these estimates are most likely low. CVS may only sell $2 billion in tobacco products, but not many customers just buy a pack of cigarettes once they proceed to the drugstore. When they are there, they probably pick up other things too. Maybe milk. Maybe candy. Maybe the prescriptions they have to counter the numerous ill effects of smoking.
CVS is increasingly moving toward providing more health services at their stores. The pharmacy chain has the second largest variety of retail locations in the country, 800 in which include “Minute Clinics” that provide basic look after common ailments and preventive measures like flu shots. Merlo has said CVS wants to add 700 more such clinics by 2017. The clear narrative CVS hopes to convey for the public is that it is really a company less about selling assorted retail products and a lot more about meeting medical care needs which do not require a visit to the doctor.
I actually have undoubtedly that, as CVS says, companies centered on protecting health have no business in the tobacco business. Many will probably argue that they have no business in, say, the candy business either. I don’t buy that logic, though. Candy will not inexorably poison us as tobacco does.
If CVS were a privately held company, the analysis could stop there. Private business owners can do whatever they want with their companies. They can elect to forego profit for principle.
A phone call like that one is tougher for that directors and managers of the publicly traded enterprise like CVS. There is a fiduciary duty to shareholders, and this duty generally takes the type of maximizing the long-run worth of the house – that is certainly, the company – entrusted for them. CVS may debate that its long-run value is enhanced by standing on principle this way. It appears clear that this argument will, in large part, concern positioning the company to adopt a more substantial share in the healthcare dollar going forward. The company’s leadership may also reason that sitting on principle will probably draw some customers to them, even as they lose others.
Maybe that logic is sound, however it is not going to be easy to prove. I am certain someone will file a lawsuit obliging CVS Hq to prove it, too. Unfortunately for CVS’ directors and management team, the likely influence on revenue and customer traffic is much more easily quantified compared to the projected and intangible benefits they presumably hope this decision can create.
In the meantime, CVS is doubling down on its position. It will not only stop selling tobacco products completely by October, nevertheless it will launch a “robust national smoking cessation program” this spring, the Los Angeles Times reported.
Although some shareholders may be hard to conquer, CVS’ decision is drawing praise from medical professionals and antismoking groups. Kathleen Sebelius, secretary of Health insurance and Human Services, said in a statement, “Today’s CVS/Caremark announcement helps bring our country even closer to achieving a tobacco-free generation.” Dr. Risa Lavizzo-Mourey, president and chief executive officer in the Robert Wood Johnson Foundation, said in the decision, “CVS is clearly establishing a leadership position to make the land healthier and then in building a culture of health.” (2) Such public endorsements will likely help CVS justify its choice, though they may not enough alone to appease shareholders right away.
I don’t think CVS does wrong by doing the right thing. Even a public firm can lead by example, as well as the demonstration of a company in the medical care business making its customers’ health its chief business focus is actually a powerful one. Time will zrfhfn if CVS’ shareholders will reap the rewards for being patient using this change. In every case, I think the positioning of CVS Hours Today – besides being ethically strong – has sufficient business justification that courts should refrain from second-guessing it. If shareholders are unhappy, they can elect a brand new board to pick new managers, or they can just sell their shares.
Congratulations to CVS on having the guts to travel first. This nonsmoker, at the very least, is willing to walk an extra block or two to show my appreciation through my purchases. The walking will likely be beneficial to me, too.