CVS Health will close dozens of pharmacies inside Target stores over the next few months.
The pharmacy chain said the closures will begin next month and be completed by the end of April.
It is among 900 locations that CVS said in 2021 it would close over the next three years. It has closed 600 pharmacies since then and plans to close 300 more locations this year, including fewer than 100 inside Target stores.
A CVS spokeswoman said the company is trying to reduce store and drugstore density, and that the decision to close some locations inside Target stores “is based on our assessment of changes in population, consumer purchasing patterns and future health needs.”
It is unclear whether there will be any pharmacy services in those stores after CVS exits.
A Target spokeswoman referred questions to CVS, noting that the drugstore chain owns and operates the pharmacies located within its stores. She said the retailer had nothing further to add.
Target sold its in-store pharmacies to CVS in 2015 for $1.9 billion, one of several big moves made by CEO Brian Cornell after he took control of the company the previous year.
Executives said at the time that Target-operated pharmacies were not profitable, and they hoped the presence of a larger pharmacy company — CVS — would help attract more traffic to their stores. The deal also increased CVS’s footprint by 20% and gave it access to some new markets without having to build new locations.
Today, CVS has about 1,800 pharmacies inside Target’s 1,950 stores.
Overall, CVS has more than 9,000 locations.
Pharmacy chains have been cutting costs as they have struggled to increase profits in recent years.
Neil Saunders, managing director of GlobalData, said some pharmacy sites are not profitable because they don’t get enough traffic and there is a lot of duplication in some markets.
“So you might have a Target pharmacy down the road from a traditional CVS,” he said. “So what they want to do is weed out sites that are underperforming and sites that have overlap just so they can be more efficient.”
For Target, CVS pulling out of some of its stores is a blow because CVS is now an integral part of Target’s offering, he said.
“CVS closing those locations leaves a gap in the target,” Saunders said. “Well, these may not be the most frequented locations. But unless Target replaces them, it’s going to be inconvenient for customers who want to shop there. And there’s going to be a slight deterioration in the service that Target provides.”
This could mean those customers come into Target stores less often, he added.
CVS said prescriptions will be transferred to a nearby CVS Pharmacy before the locations close, and said affected employees will be offered similar roles within the company.