CVS Well being to shut 900 of its drugstores over the following 3 years

CVS Well being will shut a whole bunch of drugstores over the following three years, because the retail large adjusts to altering buyer wants and converts to new retailer codecs.

The corporate mentioned Thursday that it’s going to shut about 300 shops a 12 months for the following three years because it appears to scale back retailer rely density in some places.

The closures quantity to almost 10% of the roughly 10,000 retail places CVS Well being operates. The choice “appears odd” partly as a result of some rivals are searching for to open brick-and-mortar places in the meanwhile, famous Neil Saunders, managing director of GlobalData, in a Thursday analysis be aware. However the closures come as CVS has didn’t improve its places, he added.

“Right this moment the retail facet of CVS’s enterprise is shabby,” Saunders mentioned. “Too many shops are caught previously with dangerous lighting, miserable interiors, messy merchandising and a weak assortment of merchandise.”

He added, “They aren’t locations or locations the place individuals exit of something aside from necessity.”

CVS might want to put money into its retail places and well being care providers, comparable to its insurance coverage and prescription drug plans for large purchasers like insurers and employers, to make sure its future, he added.

The corporate expects to take an impairment cost of between $1 billion and $1.2 billion within the fourth quarter for the closures. That cost will not have an effect on the corporate’s earnings forecast.

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“Our retail shops are basic to our technique and who we’re as an organization,” Karen Lynch, President and CEO of CVS Well being, mentioned in a press launch. “We stay targeted on the aggressive benefit offered by our presence in 1000’s of communities throughout the nation, which enhances our quickly increasing digital presence.”

Drugstore chains like CVS and Walgreens constructed 1000’s of places across the nation to get nearer to shopper properties. However in recent times, the explosive development of on-line buying has blunted the demand for such in-person comfort.

Shares of Woonsocket, Rhode Island-based CVS Well being Corp. rose over 2% Thursday whereas broader buying and selling indexes dipped.

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