OPERATIONS

CVS will cease tobacco sales in October

BY Dan Berthiaume

Woonsocket, R.I. – CVS will stop selling cigarettes and other tobacco products at its more than 7,600 CVS/pharmacy stores across the U.S. by October 1, 2014. CVS/pharmacy will be the first national pharmacy chain to take this step.

CVS will also launch a national smoking cessation program this spring, expected to include information and treatment on smoking cessation at CVS/pharmacy and MinuteClinic along with online resources. The program will be available broadly across all CVS/pharmacy and MinuteClinic locations and will offer additional comprehensive programs for CVS Caremark pharmacy benefit management plan members to help them to quit smoking.

CVS management estimates it will lose around $2 billion in annual revenues from lost tobacco sales, including around $1.5 billion in tobacco sales and $500 million in sales of other products to tobacco customers. This represents around 17 cents per share and $0.06 to $0.09 in earnings per share.

"Ending the sale of cigarettes and tobacco products at CVS/pharmacy is the right thing for us to do for our customers and our company to help people on their path to better health," said Larry J. Merlo, president and CEO, CVS Caremark. "Put simply, the sale of tobacco products is inconsistent with our purpose."

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OPERATIONS

Report: Target exec apologizes for breach in Senate testimony

BY Dan Berthiaume

Minneapolis – John Mulligan, executive VP and CFO of Target, said the retailer is deeply sorry for its late 2013 data security breach and is aware that consumer confidence in the company is shaken; his comments came during Feb. 4 testimony before the Senate Judiciary Committee.

According to Reuters, Mulligan also said that Target discovered 25 registers infected with malware on Dec. 18, contradicting an earlier statement from the retailer that all malware had been removed by Dec. 15.

Mulligan also said Target is thoroughly reviewing the security of its payment network and issuing new cards to customers who request them. He said the Department of Justice initially informed Target of suspicious card activity on Dec. 12, and the company then investigated, removed malware and publicly announced the breach Dec. 19.

Senators on the committee said U.S. retailers need to adopt both chip-based payment cards and four-digit customers PINs to go with them. Mulligan said Target wants to switch to chip-and-PIN card payment but so far banks have not supported the move. Committee chairman Patrick Leahy (D-Vt.) has proposed legislation to create a national standard for companies to report data breaches to the public, which has been endorsed by Federal Trade Commission chairwoman Edith Ramirez.

In addition, Michael Kingston, senior VP and CIO at Neiman Marcus Group, testified that a processing firm informed Neiman Marcus of a data breach on Dec. 13, and the retailers informed the public on Jan. 10. Neiman Marcus concluded that the breach occurred between July 16 and Oct. 30.

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RILA: Raise threshold of full-time status under ACA

BY Staff Writer

Arlington, Va. — The Retail Industry Leaders Association (RILA) is encouraged by passage of the Save American Workers Act of 2013 (H.R. 2575) out of the Ways and Means Committee on Tuesday. According to RILA, the act is an important first step in changing the Affordable Care Act’s (ACA) definition of full-time employees from 30 hours of service to a definition more in-line with employment practices.

“Raising the threshold of full-time under the ACA means that retailers will have the flexibility to continue to offer coverage at the current level, whether, for example, the level is 32, 35 or 37 hours. Retailers have voluntarily offered coverage for nearly seven decades at levels, they want to be able to continue to offer this coverage to their employees and their families,” said Christine Pollack VP of government affairs at RILA.

“Most retailers currently use an hourly or salaried workforce designation, not full-time or part-time, which reflects an employees’ desire for flexible hours and a manager’s need to staff up a store during busy times. The ACA’s definition of full-time as 30 hours of service per week fundamentally limits the flexibility of staffing from both the employee and store manager standpoint,” RILA stated in a letter submitted ahead of the mark-up.

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