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Courage in business counts: How CVS turned a tobacco ban into a financial win

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Hanging in the lobby of CVS’s corporate headquarters was a huge sign that stated their Just Cause: Helping people on their path to better health. And the company’s executives believed it. They saw their company as having a purpose beyond just making money; they wanted to use their company to advance something bigger. They regularly had meetings with health-care companies, hospitals and physicians on how they could better work together for patients. However, near the end of many of these meetings someone would point to the elephant in the room: “But don’t you sell cigarettes in your stores?”

In February 2014, CVS Caremark announced that it would stop selling any tobacco-related products in all of their over 2,800 stores. It was a decision that would cost the company $2 billion per year in lost revenue. It was a decision they chose to make even though there was no competitive pressure to do so. There was no loud public demand that they make the decision. There was no scandal. There was no online campaign to force them to make the decision.

The news was met with overwhelming support from the general public. But Wall Street and its pundits were none too pleased. “It might make money in Oz,” said Jim Cramer, one of CNBC’s financial commentators, “but Wall Street is not Oz. [Wall Street isn’t] saying. ‘You know what? I am going to buy CVS because they are good citizens.’” Cramer went on, “I’m . . . trying to figure out the earnings per share. And the earnings per share for CVS just got worse.”

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