Monday, December 6, 2021

CVS Health will close hundreds of drug stores

CVS Health will close hundreds of drug stores over the next three years, as the retail giant adjusts to the changing needs of customers and transitions to new store formats.

The company said on Thursday it would close about 300 stores a year for the next three years, which is about a tenth of its nearly 10,000 retail locations. Because it reduces the store count density in some places.

The company said Thursday that it is evaluating population changes, customer buying patterns and future health needs to “make sure it has the right types of stores in the right locations.”

A statement from the company did not say where the stores would be closed.

CVS Health expects to charge an impairment charge of between $1 billion and $1.2 billion for the closure in the fourth quarter. That fee won’t affect the company’s earnings forecast.

Years ago, drugstore chains like CVS and rival Walgreens built thousands of locations across the country to be closer to customer homes. But the explosive growth of online shopping has dampened the demand for such personal convenience.

Drugstores are also redesigning their locations as they try to be known as more than just places to get prescriptions and cough syrups. They have become a major source of COVID-19 vaccines as well as annual flu shots.

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They are also expanding the health care services they provide.

CVS Health said on Thursday that its stores would be divided into three models.

Some will be traditional pharmacies that offer retail products as well as some health care services. Other customers will be dedicated to primary care, and the company will build an enhanced version of its “HealthHub” locations.

The company started offering those stores a few years back. These include health care workers such as dietitians and are geared towards helping clients monitor chronic conditions such as diabetes and stay on top of their health.

CVS Health, in addition to its retail business, also sells insurance and drug plans for large clients such as insurers and employers.

Shares of Woonsocket, Rhode Island-based CVS Health Corp rose $1.30 to $94.03 on Thursday, while the broader trading index dipped.

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Follow Tom Murphy on Twitter: https://twitter.com/thpmurphy

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