CVs vowing to quit selling tobacco actually highlights business ethics because of the negative impacts smoking has on health and society despite their impressive $2 billion in sales.
CV Caremark is an enormous drugstore chain in North America that promotes healthy living through its variety of over the counter drugs, vitamins and clinics. It is actually hypocritical that they were selling tobacco products in the first place as they are a drugstore looking to improve the health of its customers.
Now, by stopping the sale of tobacco they are showing that they are not only interested in profit gained from sales, but caring for their customer’s wellbeing at the risk of declining their annual income.
By ceasing tobacco sales, they might affect their overall shares due to a portion of their sales being stopped but the companies image to the public is improved and the employees will begin to recognize the company is not only searching for maximum outcome but for development of society and its people.
It’s interesting to see a company do this as it will begin to pressure other similar chains to follow suit. The real question remains, will they regret this decision or prosper in its improved image to the public.
Sorry forgot to include the weblink:
http://www.nytimes.com/2014/02/06/business/cvs-plans-to-end-sales-of-tobacco-products-by-october.html?_r=0
I agree with you, Sean. I also find it ironic that CVS Pharmacy would pursue business ethics at the expense of up to $2 billion in profits from cigarettes sales. An area to look at following CVS’ repositioning themselves as a pharmacy is expectations from investors. How will dividend growth investors react given the estimated fall in earnings per share per stock by 17 cents? And will strategic partnerships with clinics make up for the potential loss in revenue from cigarette sales? We’ll have to see whether or not the short-term losses from stopping cigarette sales is outweighed by the long-term benefit of pursuing business ethics and building an organization that creates community impact.