CVS to downsize its retail locations over the next three years
CVS has announced the future closing of a large number of stores as the company re-evaluates its locations and accelerates its omnichannel health strategy.
Beginning in the spring of 2022, the company will reduce store density in certain locations, closing 300 stores per year for the next three years. The closures will impact nearly a tenth of CVS’ 10,000 locations. The company says that changes in population, consumer buying patterns and future health needs led to the decision to downsize its retail footprint.
The news comes after the company reported strong numbers for Q3 of 2021, with revenues up 10% year over year, totaling $73.8 billion. Total revenues year to date increased to $215.5 billion, an increase of 8.2% compared with the prior-year period.
"Our retail stores are fundamental to our strategy and who we are as a company," said Karen Lynch, president and CEO of CVS Health. "We remain focused on the competitive advantage provided by our presence in thousands of communities across the country, which complements our rapidly expanding digital presence."
In connection with the planned store closures, the company expects to record an impairment charge in Q4 of 2021 of between $1.0 billion and $1.2 billion related to the charges of operating lease right-of-use assets, property and equipment.
As part of the company's strategic review of its retail business, CVS Health will also create new store formats to drive higher engagement with its customers Three distinct models will serve as community health destinations:
- Sites dedicated to offering primary care services.
- An enhanced version of HealthHUB locations with products and services designed for everyday health and wellness needs.
- Traditional CVS Pharmacy stores that provide prescription services and health, wellness, personal care and other convenient retail offerings.
The company said it is “committed to offering impacted colleagues roles in other locations or different opportunities as part of its overall workforce strategy.” The chain employs over 300,000 people, including more than 40,000 in the medical field.