November 23, 2014


CVS changes name, stops tobacco sales early

CVS Caremark has changed its name to CVS Health, and introduced a new logo. (PRNewsFoto/CVS Health)

CVS Caremark has changed its name to CVS Health, and introduced a new logo. (PRNewsFoto/CVS Health)

As CVS sharpens its focus on customer health, the nation’s second-largest drugstore chain will tweak its corporate name and stop the sale of tobacco nearly a month sooner than planned.

CVS Caremark said it will now be known as CVS Health, effective immediately. The signs on its roughly 7,700 drugstores won’t change, so the tweak may not register with shoppers.

However, those customers will see a big change when they check out. The cigars and cigarettes that used to fill the shelves behind store cash registers have been replaced with nicotine gum and signs urging visitors to kick the tobacco habit.

A store in downtown Indianapolis also stocked free tobacco quit packs where cigarettes used to sit. The red-and-white boxes, nearly the size of a cigarette pack, contain coupons, a card showing how much a smoker can save by quitting and a booklet with Sudoku and other games to distract someone fighting the urge to smoke.

CVS and other drugstores have delved deeper into customer health in recent years, in part to serve the aging baby boom generation and the millions of uninsured people who are expected to gain coverage under the federal health care overhaul. While competitors Walgreen Co. and Rite Aid Corp. still sell tobacco, they’ve all started offering more health care products and added walk-in clinics to their stores while expanding the care they provide.

Drugstores now offer an array of vaccinations and flu shots, and many of their clinics can help monitor chronic illnesses like diabetes or high blood pressure.

“We’re doing more and more to extend the front lines of health care,” CVS CEO Larry Merlo said.

The corporate name change reflects this push while removing a reference to the company’s biggest revenue producer, its Caremark pharmacy benefits management side.

That’s good because the average person didn’t understand the word Caremark, according to Laura Ries, president of the brand consulting firm Ries & Ries.

While the new name won’t appear on store signs, it may provide a better sense of what CVSdoes to the few investors or people on Wall Street who don’t know about the company, which is ranked 12th in the 2014 Fortune 500.

Even so, Ries said the name’s power is limited because health is a generic word that is common in many company names.

“It’s an improvement off of Caremark, but it’s not some amazing wonderful thing that will change the world,” she said.

CVS announced earlier in February that it would phase out tobacco sales by Oct. 1 because it could no longer sell smokes in a setting where health care is delivered. Merlo said the company moved up its quit date nearly a month because they got ready for the move sooner than they anticipated, not because its distribution centers had already run out of tobacco.

The CEO has said CVS will lose about $2 billion in annual revenue by phasing out tobacco. The company still expects that, but its executives also believe they can counter that loss at least in part through growth the company may get from health care. Merlo declined estimate how much of a benefit CVS expects.

The potential revenue loss hasn’t spooked investors so far. CVS shares closed at $79.73 on Tuesday and have climbed about 21 percent since the tobacco announcement. That outpaces the 14 percent gain notched by the Standard & Poor’s 500 index over the same span.

  • Joe Smith

    Are they also going to quit selling fatty potato chips and foods/ drinks full of sugar and prescription drugs that kill people by the hundreds of thousands?
    Its their business but the items with the higher mark ups are still there.

    • Phil Blank

      Over got that covered too.
      Posted the following on another CVS article:

      But why stop at tobacco?

      Remove all beer, wine, energy drinks, pop and or soda pops.

      Any form of candy, cough drop, cough syrup with artificial colors, flavorings and artificial sweetners.

      Remove all cookies,  cakes, cupcakes,  donuts,  chips pretzels,  etc.

      Remove all prescription drugs with known side effects. 

      Remove all birth control pills due to the risk of blood clots, remove all male erectile dysfunction drugs due to side effects. 

      Remove all over the counter diet aides with questionable drugs.

      And the biggest of all?

      Remove all that junk you’ve got in the stores that say “made in  China,  bad dangerous chemicals in that stuff.

      Keep going and you will soon remove all customers!

  • Chan

    Expecting to lose $2 billion annually with this change. Glad to see a company go out on a limb. I wonder if any other companies will follow their lead?

  • SniperFire

    They plan to replace it with weed sales.

    • Alan Pugh

      It would make sense, considering one has no redeeming quality and the other helps with a litany of health issues, being listed as a medicine for over 100 years on US medical books until William Randolph Hearst wanted it banned when it threatened his paper industry eighty years ago.

      • SniperFire

        ‘one has no redeeming quality’

        Oh, I dunno. Weed sales helps drive the snack food industry.

  • ekwaykway

    Could have kept the 2 billion in revenue and gave it to their employees. We all know that would never happen.

    • Pablo Jones

      $2 billion in revenue (sales) does not mean they made $2 billion. The markup for tobacco products is a few percent. Spread out between all employees it would only be a few cents per hour.

      • ekwaykway

        Better than nothing.

  • SJ82

    And for that bit of politically motivated bull, I’ll never shop there again.

    The government does more than enough nanny state “for your own good” meddling, I won’t tolerate it from the private sector.

    I hope that place folds for want of customers.

  • Heather Overstreet

    Whenever possible I will now specifically shop at CVS to give them money to support this move

  • tickmeoff

    Stupid Idea. Giving up 2 billion in annual revenue. A CEO is supposed to be enhancing the bottom line, not making it smaller. I give the CEO 6 months, and the cigarettes will be back in a year. I don’t smoke myself, but buy them for the wife. Drug mart has the right idea, they save you the run around. Convenience and price outweighs the health message for me. I don’t have any problem with people preaching about how bad cigarettes are, but in the end, we are adults.
    CVS was never my number one choice, but this decision definitely puts them further down the list. Good luck trying to make up that 2 billion in revenue!