CVS Health to close hundreds of pharmacies
CVS Health will close hundreds of pharmacies over the next three years, as the retail giant adapts to changing customer needs and switches to new store formats.
The company said Thursday that it will close about 300 stores annually over the next three years, roughly a tenth of its 10,000 retail locations, as it reduces store density in some places.
CVS said it was assessing demographic changes, customer buying patterns and future health needs “to make sure they have the right types of stores in the right locations.”
No details on where the shutdown will occur were released by CVS Thursday.
The explosive growth of online shopping has dampened the need for customers to shop at thousands of sites operated by drugstore chains such as CVS and Walgreens. This trend worsened with the onset of the COVID-19 pandemic with a lot of clients at home.
The company also has some nested stores, but GlobalData general manager Neil Saunders sees another big factor behind the shift announced Thursday.
Saunders believes CVS has neglected its retail business and pushed some of its sites “into a downward spiral of irrelevance.”
“Many stores were stuck in the past due to poor lighting, frustrating interiors, chaotic merchandising, and a poor assortment of products,” Saunders said in an email. “They are not destinations or places where people go out for anything other than necessity.”
Pharmacies are redesigning their sites as they try to become known as more than just places to pick up prescriptions and cough syrups. They have become a major source of COVID-19 vaccines as well as annual flu shots.
They are also expanding the healthcare services they provide.
Aside from operating pharmacies, CVS Health also sells health insurance and administers prescription drug plans to large clients such as insurance companies and employers.
CVS Health said Thursday that its stores will be grouped into three models.
Some will be traditional pharmacies that offer retail products as well as some healthcare services. Others will be devoted to primary customer care, and the company will release an improved version of its “HealthHUB” sites.
The company started introducing those stores a few years ago. Among these are health care workers like dietitians, community rooms for things like yoga classes, and stores geared toward helping clients monitor chronic conditions like diabetes and stay informed about their health.
CVS Health said Thursday that it expects to collect impairment charges of between $1 billion and $1.2 billion in the final quarter of the shutdown. This fee will not affect the company’s earnings forecast.
Shares of Woonsocket, a Rhode Island-based CVS Health Corp., rose 2% to $94.66 Thursday while broader trading indexes slipped.
Follow Tom Murphy on Twitter: https://twitter.com/thpmurphy
Copyright 2021 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed without permission.