CVS Health will close dozens of pharmacies at Target stores over the next few months.
The pharmacy chain said the closures will begin next month and be completed by the end of April.
They are among 900 locations expected to close over the next three years, according to CVS in 2021. Since then, the company has closed 600 pharmacies and plans to close another 300 stores this year, including fewer than 100 at Target stores.
A CVS spokeswoman said the company is trying to reduce store and pharmacy density and the decision to close some locations within Target stores was “based on our assessment of changes in the population, consumer purchasing behavior and future health needs.” “.
It's unclear whether there will be pharmacy service at these stores following CVS's exit.
A Target spokeswoman referred questions to CVS, noting that the pharmacy chain owns and operates the pharmacies in its stores. She said the retailer had nothing further to add.
Target sold its chain pharmacies to CVS for $1.9 billion in 2015, one of several big moves made by CEO Brian Cornell after taking control of the company the year before.
Executives said at the time that Target-run pharmacies were not profitable and that they hoped operating them through a larger pharmacy provider – CVS – would help drive more traffic to their stores. The deal also increased CVS's footprint by 20% and gave it access to some new markets without having to build new locations.
Today, CVS has about 1,800 pharmacies in its 1,950 Target stores.
In total, CVS has more than 9,000 locations.
Pharmacy chains have been cutting costs as they have struggled to grow profits in recent years.
Neil Saunders, managing director of GlobalData, said some pharmacy locations simply weren't profitable because they didn't have enough customer traffic and there was a lot of duplication in some markets.
“So maybe you have a Target pharmacy near a traditional CVS,” he said. “So what they want to do is eliminate low-performing locations and locations where there is overlap just to be more efficient.”
For Target, CVS's withdrawal from some of its stores is a blow because CVS is now an integral part of Target's offering, he said.
“CVS closing these locations leaves a void at Target,” Saunders said. “Okay, these might not be the busiest locations. But if Target doesn't replace them, it will be annoying for customers who want to shop there. It will be a slight deterioration in the service that Target provides.”
And it could mean those customers come to those Target stores less often, he added.
CVS said prescriptions will be routed to a nearby CVS Pharmacy before the locations close and affected employees will be offered comparable roles within the company.