CVS Health Corp. said Thursday it will shut about 900 stores in the next three years and focus more on health care.
The Woonsocket, R.I., parent company of Aetna said it has been evaluating changes in population, consumer buying patterns and future health needs to “ensure it has the right kinds of stores in the right locations for consumers and for the business.”
It will shut about 300 stores a year for the next three years, representing nearly 10% of CVS retail locations. The first sites, which will be closed next spring, have yet to be identified.
CVS said locations will serve as “community health destinations” that offer primary care services, an improved version of its HealthHUB locations with products and services, health and wellness needs and traditional CVS pharmacy stores that provide prescription services and health, wellness, personal care and other retail offerings.
The company reported at the end of 2020 more than 9,900 retail locations and about 1,100 walk-in medical clinics.
“Our retail stores are fundamental to our strategy and who we are as a company,” Chief Executive Officer Karen Lynch said. “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.”
CVS said it planned to offer jobs elsewhere in the company to employees affected by the store closings.
Spencer Perlman, managing partner and director of health care research at Veda Partners in Bethesda, Md., said CVS was looking to reduce its pharmacy business, which increasingly is done by mail, and to increase its health care services.
“A lot of this comes down to the Amazonization of retail behavior,” he said. “Rather than go to the pharmacy … you can just get something delivered to your door.”
At the same time, CVS is looking to draw customers to stores to buy higher mark-up groceries.
“To the degree you have less traffic they’re looking at new ways to bring people into stores,” he said.
And bolstering health care services plays to the increasing ease of non-hospital care and urgent care as entry points in the health care system, Perlman said.
“The practice of health care is shifting more to outpatient and urgent care, to less traditional ways of delivering primary care,” he said.
CVS said it expected to record a charge in the fourth quarter of $1 to $1.2 billion or between 56 cents per share and 67 cents per share related to the write-down of lease, property and equipment. As a result of the planned store closings CVS has reduced its per-share guidance for the year to a range of $5.46 to $5.67, from $6.13 to $6.23.