CVS to Close 900 Stores, Names Co-Presidents of Retail Business
The leaders of CVS Health Corp. plan to close about 900 stores in the next three years and will soon say goodbye to the president of the company’s pharmacy/retail group after she spent just a year in that role.
Woonsocket, Rhode Island-based CVS said Neela Montgomery, who previously was CEO of home goods retailer Crate & Barrel, will leave the pharmacy giant at the end of 2021. Montgomery started in her role (and as an executive vice president of CVS as a whole) on Nov. 30 of last year and was lauded for her broad digital and e-commerce experience built at Crate & Barrel as well as the Otto Group and British retailer Tesco. But CVS on Nov. 18 said her role will be divided between Prem Shah, who has been named to the newly created role of chief pharmacy officer, and Michelle Peluso, who earlier this year joined CVS as its chief customer officer.
Shah has been with CVS since 2013 and is its executive vice president of specialty pharmacy and product innovation. Starting in January, he will oversee CVS’ omnichannel strategy while Peluso will run overseeing front-store strategy and operations. The latter will include rolling out three new store formats President and CEO Karen Lynch and her team have designed to better react to “changes in population, consumer buying patterns and future health needs.”
The new formats will be:
• Sites dedicated to offering primary care services
• Locations with products and services designed for everyday health and wellness needs
• Traditional CVS Pharmacy stores that provide prescription services and a range of retail offerings.
The board of CVS has approved a plan to close about 300 stores in each of the next three years, although the exact number and timing of the closures could change. Lynch and her team said they expect to offer workers based at stores that are closing jobs at other locations or different positions with the company. The planned closures amount to nearly 10% of CVS’ retail network, which has roughly 8,100 stores and 1,900 retail pharmacies within other retailers’ locations. The company’s stores range from 5,000 to 30,000 square feet, with newer stores typically having 11,000 to 15,000 square feet.
To account for the closings, the CVS team expects to book impairment charges of between $1.0 billion and $1.2 billion this quarter and has trimmed its 2021 earnings guidance accordingly. Shares of the company (Ticker: CVS) were up about 3% in midday trading Nov. 18; they have risen about 8% over the past six months.
