Posted on 02/05/2014 5:01:07 AM PST by Red in Blue PA
CVS Caremark is kicking the habit of selling tobacco products at its more than 7,600 drugstores nationwide as it focuses more on providing health care.
The nation's second-largest drugstore chain said Wednesday that it will phase out cigarettes, cigars and chewing tobacco by Oct. 1, a move that will cost about $2 billion in annual revenue but won't affect its 2014 earnings forecast. CVS Caremark leaders say removing tobacco will help them grow the company's business of working with doctors, hospitals and other care providers to improve customers' health.
(Excerpt) Read more at finance.yahoo.com ...
I forgot about the candy. That’s not good for you either, or cokes or chips.
You are arguing that a one-percent intraday drop means that the "market hates it." And you are ignoring that the market (particularly the idiot day traders who tend to account for much of these sorts of small fluctuations) are heavily biased towards short-term results, often at the expense of long-term planning. LOL!
If the market thought this was a good business decision, CVS at the very least would not be trailing the overall market.
There is no arguing that.
You point regarding day-traders is ludicrous as day-traders trade ALL stocks, not just CVS. Any more excuses you have why the stock is down?
You have a chart? Of 2.5 hours of trading? Showing a ~1.5% drop in share price? Whoa, that convinced me. CVS had better just close up shop now - at this rate, it’ll be a penny stock by today’s close.
This decision came out today. Stocks will move on new pieces of news, so yes it is significant.
I suppose you would be saying the same thing if CVS stock went up by 10%/s
"Any more excuses"? Nope. Just what I've been saying all along. It's short-term vs. long-term. In the short-term, this decision will likely lead to a net decrease in CVS's revenues (or, at best, they'll break even). In the long-term, given the long-term downward trend in smoking rates and upward trend in the sorts of quick-service medical consultations CVS is expanding, this decision will likely be a net positive for CVS's revenues.
The market--and particularly those traders who trade on news like this in the moments immediately following the news--tends to be biased towards short-term performance over long-term value. So, it is not unusual that a business decision that is likely to have a (small) immediate negative impact, but a long-term positive impact, will result in a (small) short-term (very short-term) decline in share price.
If it was so easy to replace revenue, then all companies would be selling whatever products CVS will be selling. But it is not easy, an this is an in your face move to shareholders.
WHAT! How dare they!
Yawnnnnnn. Second guessing the CEO and asserting YOU know how to run their business better is just blather. Wrapping yourself in the conservative banner doesn't pass the smell test.
Tell us, is this about your own personal vice or is it about conservative values? 'Cause the argument that it's about conservative values is just blowing smoke. (Ha ha ha I crack myself up sometimes)
Give me a break. In a crappy economy, no CEO worth his salt passes up $2 Billion in sales per year. That is tantamount to medical malpractice.
The CEO and anyone else involved in this decision should be canned. Shareholders are supposed to come first; not some government initiative.
But all companies don’t sell all products or services. Companies sell products and services that are within the company’s expertise, or otherwise make sense for the company to sell. CVS believes that their “minute clinics” are a long-term growth area for the company, while tobacco products are a long-term diminishing market.
CVS is hardly a tobacco discount house; my friends who smoke cigarettes go to much cheaper places.
If the shareholders want to fire the CEO and anyone else involved in this, then they are free to do so. The Board of Directors can fire the CEO, and if the Board fails to act, then the shareholders can replace them with a Board who will.
(Don't hold your breath.)
BTW, look at the stock price now: CVS has been outperforming the DJIA for the past couple of hours. Since, by your acount, 2 hour intraday periods are tremendously meaningful, I'd say the market is loving this decision now....
Where I live CVS is cheaper than any other place.
I admire your tenacity, but you are arguing with liberals. It’s like hitting your head against a brick wall. Try not to get too big of a headache. :)
I'm a liberal because I believe a company should have the right to decide which products it does and does not sell? Or is it because I happen to think that, in the long-run, this is a wise business decision?
So you won’t have to see tobacco products on the way to buy your abortion pills.
I simply cannot believe what I am reading. These people must have never owned individual stocks because this CEO is abdicating his responsibility and it is clear as day.
A number that falls every year. How long do you support a dwindling part of your business? How long do you chase a shrinking customer base instead of putting your resources into something that's growing?
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