CVS/pharmacy's plans for health, beauty in line with company mission
How is CVS Health planning to replace the loss of $2 billion in tobacco sales? By driving core front-end businesses and improving the shopping experience. In fact, CVS/pharmacy has big plans for health and beauty, Helena Foulkes, EVP and president of CVS/pharmacy, told analysts during the company’s Annual Analyst Day on Dec. 16.
As the Drug Store News article states, CVS/pharmacy is looking to showcase its expertise in health care and enhance the in-store shopping experience through, for example, and expanded OTC section, a greater selection of on-the-go healthy foods (a $1 billion opportunity!) and creating an accessible specialty look and feel in beauty.
“In looking at the front store, our goal is to position ourselves as health and beauty destination to drive profitable growth. We’ve already had success and we have a strong plan to go farther,” Foulkes told analysts.
As the company aggressively positions itself along the frontlines of health care with its unique, integrated model, it comes as no surprise that it is now looking to bring its health focus to edibles with enhanced healthy food choices, and to beauty with an increased focus on naturals and healthy solutions. It’s a move that makes sense and is bound to be a win-win for the company as it forges ahead on its mission to “help people on their path to better health.”
The company’s strong growth — despite its exit from tobacco products — and ability to capitalize on emerging healthcare trends has, no doubt, caught the eye of Wall Street.
“While the U.S. healthcare market is dynamic, one thing is not changing: strong operating performance for CVS Health. Other constants for CVS include: continuity of executive management, market share gains in the pharmacy benefit manager and retail businesses, large free cash flow, a rising dividend, and impressive EPS growth during a tumultuous time for competitors. We continue to believe the integrated model is well positioned to capitalize on emerging healthcare trends, and intelligent capital deployment should enhance shareholder value,” said William Blair analyst Mark Miller in a recent research note.
Blair added, “It is particularly impressive that CVS has been able to sustain this strong growth despite an estimated $0.17 EPS detriment from the exit of tobacco (incremental headwinds of $0.08 in 2014 and $0.09 in 2015) and compared with relative weakness of direct competitors. We maintain our 2014 EPS estimate of $4.53 (14% growth), above guidance of $4.47 to $4.50, and raise our 2015 EPS estimate by $0.10, to $5.20 (15% growth), at the high end of the company’s guidance range for next year.”