Earlier this year, CVS closed 46 stores; and it looks like more are heading to the chopping block soon. According to the company, another 22 “underperforming” drug stores will be shuttered in early 2020. Apparently, the company says, the slowing business in these locations has already cost them roughly $96 million.
As such, CVS Chief Financial Officer Eva Boratto has been quick to relate: “We believe these decisions will generate enhanced longer-term performance. Our real estate footprint remained very productive, and we will look for opportunities to further improve the performance in our portfolio.”
While this news is somewhat shocking the number of stores closing is not too bad when you consider that CVS still has 9,900 stores across the United States. Effectively, then, this new round of cuts represents less than 1 percent of the total stores.
That said, research firm Coresight Research has recently reported there have been 48 percent more store closing in 2019 than the year before. This includes major chains like Forever 21, Dressbarn, Kitchen Collection, and Destination Maternity, who have all said they definitely expect to close stores be the end of this year. At the same time, Sears expects at least 122 stores (Sears and Kmart franchises) will close within the next few months.
Coresight Research goes on to list that their figures of various retailer’s earnings reports –including bankruptcies and other records—at least 8,600 stores are likely to close this year across the retail industry.
But while the closing of stores typically reflects lower business volume, adjusted earnings per share at CVS has increased 6.4 percent in the third quarter, since the same time last year: now at $1.84. Total revenues for the third quarter are up an impressive 36.5 percent year over year. Still, analysts argue that the revenue rise year-over-year was mostly driven by CVS’ acquisition of Aetna, with some help from expanded volume and brand name drug price inflation.