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Did CVS Burn Itself by Banning Tobacco Sales?

CVS Caremark warned earlier this year that its decision to ban tobacco sales from all of its stores would come with costs, but investors may not have realized just how widespread they would be.

Up in vapor. CVS won't be participating in e-cig revolution. Photo: Vuse Vapor.

This is a fast-growing segment of the tobacco industry, and some analysts believe it can one day overtake traditional tobacco sales, but CVS has turned the market over to the competition.

For all the losses it was willing to accept, CVS hoped that it could win more business from hospitals and insurance companies as a result of its stance. If the company can be seen as helping to make their patients healthier, it just might gain something from the halo effect of its actions. So far, though, that hasn't panned out.

Management said in the latest earnings call that it can't pinpoint any one win for pharmacy benefits management that it could tie to the tobacco ban. Sure, it's still early yet and that win could still come, but this potential tangible benefit to the ban hasn't materialized. Investors need to hope that this branding effort around public health ultimately helps the business overcome these more tangible headwinds.

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The article Did CVS Burn Itself by Banning Tobacco Sales? originally appeared on Fool.com.

Rich Duprey has no position in any stocks mentioned. The Motley Fool recommends CVS Caremark. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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