Target Wins With CVS

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Brian Cornell- Chairman of the Board, Chief Executive Officer


The agreement between Target and CVS, allowing the drugstore chain to acquire Target’s pharmacies and in-store clinics for a deal valued at $1.9 billion, is at this early stage a win-win for two currently, boldly dynamic companies.

CVS’s move to drop sales of cigarettes was certainly bold. While it fit in with the company’s wellness mantra, it did cost the retailer in terms of significant revenues and profits. Chief competitor Walgreens has yet to follow suit.

Target CEO Brian Cornell has shown that he is nothing if not decisive. When he took over Target just two years ago, he was overseeing a company which had been crushed by an essentially landmark data breach on one front and a disastrous entry into Canada on another. Target headquarters at the time was leaking reports of a widespread malaise across the corporate spectrum.

Key executives were removed after the debacle which was the data breach and its crushing financial aftermath. It is likely Mr. Cornell’s predecessor was one of these victims.

Then after announcing a wait and see approach for the future of its Canadian retail operations as the holiday season approached, Cornell quickly shuttered Target Canada soon after the holiday results were in. This took most observers by surprise on both sides of the international border.

Now this move with CVS Health. If the deal is approved by federal regulators, CVS will operate pharmacies within Target locations and add Target clientele to its roster. CVS will take over around 80 in-store clinics located within Target locations and rebrand them as MinuteClinic. CVS also intends to open an additional 20 clinics within Target stores within three years of the deal’s closing. The growing number of TargetExpress stores will include CVS pharmacies.

In addition to gaining a substantial number of prescription customers, CVS will gain immediate entry into several significant new markets already established by Target including Denver, Portland, Salt Lake City and Seattle.

From Target’s point-of-view, they add valuable branding and a very professional partner in an area which should give them a key upgrade in their drug operations. The move should also allow Target to more keenly focus on growing grocery operations, while expanding core merchandising,

The nearly $2 billion Target stands to receive from the deal, should assuage at least some of the damage brought about by the results of the data breach and the Target Canada failure. This deal should leave Target somewhat flush with cash. This is always a fine position for any company with aspirations for growth to enjoy.