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Wal-Mart Will Stop Selling Cigarettes -- It's Only a Matter of Time

Shoppers at a Wal-Mart store in North Miami, Florida. (Photo by Joe Raedle/Getty Images/Thinkstock.)

As long as cigarettes are legal, retail stores have every right to sell them. But at what point does a company claiming to be a champion of affordable health care lose credibility by continuing the practice?

That's the question Wal-Mart (NYSE: WMT  ) , the world's largest retailer, needs to decide. And the pressure to do so increased with the recent announcement by CVS Caremark (NYSE: CVS  )  that it will stop selling tobacco products by the beginning of October.

"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 CVS's chief executive officer Larry Merlo. "Put simply, the sale of tobacco products is inconsistent with our purpose."

Should Wal-Mart follow CVS's lead?
To be fair, Wal-Mart and CVS are markedly different companies. Whereas CVS holds itself out as the "largest integrated pharmacy health care provider in the United States," Wal-Mart is instead a discount retailer that sells a wide range of merchandise, health and wellness products being one of many.

At the same time, however, the Arkansas-based company has pushed heavily into the health-care space as it anticipates heightened demand from the aging baby boomer generation. Indeed, every annual report over the past eight years has trumpeted its role in improving the health of its customers and associates.

The company went so far in 2006 as to claim that an "essential part of Wal-Mart's mission is to provide sustainable, healthy, value-oriented products to meet customers' needs." It doubled down in 2011 by saying it has an "enormous responsibility to lead on issues that make a difference for associates and communities ... [including] economic opportunity, sustainability, responsible sourcing, healthy living, and community involvement."

To the company's credit, it's considered halting the sale of tobacco products for more than a decade and even ceased the practice completely in its Canadian stores in 1994 when confronted with pressure from the government. But the one thing that has always stood in its way has been the company's commitment to shareholders.

Before becoming CEO, Doug McMillon, then head of the chain's Sam's Club unit, told The Wall Street Journal that halting cigarette sales is something he has "thought about." He nevertheless went on to note: "I don't expect it to happen in the next year. It's a big business, so it makes it harder to stop."

It's clear that Wal-Mart is stuck between a rock and a hard place. On one hand, I believe it's honestly committed to playing a positive role in society. Why would it not, considering who its customers are? But on the other, its board members and executives owe shareholders a fiduciary duty to be responsible stewards of the bottom line.

How will this play out? That remains to be seen, but I think it's less about if it will happen and more about when. And when that time comes, it's not Wal-Mart shareholders who will have reason to quiver. It'll be the tobacco companies.

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Read/Post Comments (25) | Recommend This Article (16)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 16, 2014, at 3:29 PM, nomorenj wrote:

    I see very few people buying cigarettes from Walmart for 2 reasons. Only one register has them, and you can buy them from the drive through cigarette place, at the end of the Walmart parking lot, for .40 to $1.00 a pack cheaper.

  • Report this Comment On February 16, 2014, at 3:52 PM, Flaco123 wrote:

    Since Walgreens started their "be well" campaign I've always found it amusing to buy cigarettes there and be told by the hyper-smiling clerk "BE WELL!"

  • Report this Comment On February 16, 2014, at 4:12 PM, snatchmo wrote:

    "And when that time comes, it's not Wal-Mart shareholders who will have reason to quiver. It'll be the tobacco companies".

    It won't make a bit of difference. People who use tobacco products are going to get those products regardless. Most people buy them at convenience stores and convenience stores will never stop selling them.

  • Report this Comment On February 16, 2014, at 4:30 PM, rayrock1 wrote:

    I would think that Wal-Mart makes a lot of money on the float. They collect taxes at the time of the sale, but they hold onto that money and earn interest on it for a period of time before the send it to the tax collector.

  • Report this Comment On February 16, 2014, at 4:34 PM, snipe1949 wrote:

    I have read that one marijuana joint has 20 times the cancer causing agents as tabbaco so why is this OK.

  • Report this Comment On February 16, 2014, at 5:40 PM, cheapshotrebate wrote:

    amount of people that die from:

    lung cancer:159,000

    high blood pressure- 600,000. I wonder if this will prompt them to pull bacon/lard from their shelves, or any of the many other products that people willingly ingest which have detrimental health effects?

  • Report this Comment On February 16, 2014, at 6:02 PM, Thatscrazy14 wrote:

    I'm a non smoker.. but this is totally crazy. If people want to smoke let them. If Wal Mart is claiming to be Healthy! whats next Candy, Soda, Chips, crackers, Stuff with gluten in it, Peanuts ( peanut allergies) energy drinks, Shall I continue. Corporate and Government should keep out of peoples right to eat or smoke what they want, if they get sick that's their problem they know they risk is when they are smoking eating or doing what ever.......

  • Report this Comment On February 16, 2014, at 6:45 PM, wareagle1971 wrote:

    It will surely stop that one check out line where the smokes are from being constantly jammed up ALL the damn time! I don't see it though !

  • Report this Comment On February 16, 2014, at 7:36 PM, cadking2k5 wrote:

    and a matter of time before they start selling pot

  • Report this Comment On February 16, 2014, at 10:06 PM, Kelly wrote:

    If you took everything out of Walmart that was unhealthy or potentially harmful, half the shelves would be empty.

  • Report this Comment On February 16, 2014, at 10:43 PM, Michaelnel4449 wrote:

    Between alcohol and tobacco over 9,000 Americans loose their lives EVERY WEEK.... Bin Laden could only dream of killing as many Americans as these two legal products do every year. Get it, America?

  • Report this Comment On February 16, 2014, at 10:46 PM, bacaca523 wrote:

    I don't understand the deal with the cigarettes if what they should be trying to get out is the alcohol. This causes death to not only itself through lung cancer or alcohol poisoning but also takes lives by the irresponsible ones that drink and drive. How come nobody sees that.

  • Report this Comment On February 16, 2014, at 11:43 PM, pkgolfer49 wrote:

    Just as well, cigarettes are more expensive at CVS and Wal mart anyway.

  • Report this Comment On February 17, 2014, at 4:10 AM, Disgustedman wrote:

    If the stores REALLY cared, they'd NEVER sell smokes, alcohol, condoms, morning after pill, pharmaceuticals which can harm your liver....There's alot of other bad stuff they sell still...

  • Report this Comment On February 17, 2014, at 4:32 AM, adech64 wrote:

    okay if they are willing to stop selling cigs then why start selling alcohol? money people that's why. T

    hey really are not into better health!

  • Report this Comment On February 17, 2014, at 8:16 AM, servantoftruth wrote:

    People who smoke cigarettes or any other thing are self-haters and completely self-destructive so it doesn't bother me at all. Free enterprise is the right to do as you please. I'll respect them even more.

  • Report this Comment On February 17, 2014, at 9:37 AM, Opinion123 wrote:

    There are tons of things that ruin your health... fatty food being the worst. I wouldn't have an issue with additional taxes being added to these types of goods. The additional taxes could go directly to the health care needs of offending participants. The tax from tobacco could be used for treating lung cancer, the tax from alcohol could be used for liver cirrhosis, and the tax from fatty foods could be used for heart and diabetes treatments.

  • Report this Comment On February 17, 2014, at 11:00 AM, jimmyers1 wrote:

    This all must be making Rite Aid very happy.

  • Report this Comment On February 17, 2014, at 11:14 AM, cityperson wrote:

    Tax from all these could be used to cure the liberal disease, striking our country.

  • Report this Comment On February 17, 2014, at 2:03 PM, peckbill wrote:

    I hope Wal Mart resists the pressure to stop selling tobacco products. The danger has been over blown for some years and it will take some common sense to instill order. People should be allowed to smoke and buy the products at a reasonable price.

  • Report this Comment On February 17, 2014, at 2:51 PM, PaulSell wrote:

    YEAH! Right after they VOTE IN UNIONS! You Idiots!

  • Report this Comment On February 17, 2014, at 3:00 PM, Lance1234 wrote:

    I can only shake my head at the folks who are so intent on controlling everyone’s life. I recall when in the early 1950’s those arguing against the sale and use of tobacco products were the Fundamentalist Preachers preaching against defiling the human body made in the images of Christ and it was the Social Liberals telling them to shut up and get their religion out of government and law. I think it ironic that those folks have become what their earlier incarnations detested. It has taken 60 years, but the fundamentalist Preachers are on the way to winning.

  • Report this Comment On February 17, 2014, at 3:59 PM, ozzlefinch wrote:

    If ANY company really "cared" about the health of their customers, they would all stop selling Chinese children's toys, Chinese meat and poultry, processed foods high in fat and sugar and salt, and they would all stop selling alcohol. Let's see how this story develops.

  • Report this Comment On February 17, 2014, at 7:39 PM, 4Mike4 wrote:

    Walgreens is so concerned bout maintaining the image of profitability by continuing to give dividends at the risk of pharmacy safety by cutting staff ,hours, and increasing workloads, and further rigging work schedules that only technicians are able to rest and lunch breaks. Powerbar anyone?

    cut profits from cigarettes and or alcohol and the staff will be the ones paying for it.

  • Report this Comment On February 20, 2014, at 7:15 PM, eek wrote:

    Walmart will never stop selling cigarettes, its that simple. You will never stop people from smoking, make it illegal and they still will, so here is an idea. stop trying to control other peoples lives.

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John Maxfield

John is The Motley Fool's senior banking specialist. If you're interested in banking and/or finance, you should follow him on Twitter.

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8/28/2015 4:01 PM
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