CVS Health Corp. said it will close 300 stores a year over the next three years and take a charge of as much as US$1.2 billion, part of a plan to decrease its store density in some areas.
The reduction represents about nine per cent of CVS's current 9,900-store footprint. As part of a strategic review, the pharmacy chain will create three new store formats designed to increase interaction with customers, CVS said in a statement. Part of the goal is to balance the types of stores needed in different locations, including ones that offer primary-care services.
Executive changes will accompany the moves. Neela Montgomery, executive vice president of retail and pharmacy, will leave the company at the end of 2021, CVS said. She joined the Woonsocket, Rhode Island-based pharmacy chain just a year ago after leading furniture retailer Crate & Barrel.
Prem Shah was named to a new role as chief pharmacy officer and as of Jan. 1 will become co-president with Michelle Peluso of CVS Health's retail business.
CVS will take an impairment charge of US$1 billion to US$1.2 billion in the fourth quarter related to the writedown of leases, property and equipment.
Jonathan Palmer, a Bloomberg Intelligence health-care industry analyst, called the update a positive look at the company's multiyear transformation ahead of its December 9 investor day.
"The closing of 900 stores over the next three years, three defined store formats and elevation of two executives to co-president roles signal further refinement is afoot," Palmer said.
The company's shares rose 1.1 per cent at 10:20 a.m. in New York and had gained 36 per cent this year through Wednesday's close. - Bloomberg