Walmart Inc. is ending cigarette sales in specific locations, claiming a “business decision” to exit the tobacco sector. Tobacco stocks took a knock as a result of the move, with Altria Group Inc., which sells Marlboro cigarettes in the United States, falling the highest in almost three weeks.
The change is the result of an internal Walmart discussion and impacts stores in California, Florida, New Mexico, and Arkansas, according to the Wall Street Journal, which cited anonymous sources close to the matter. Cigarette shelves are being replaced with self-checkout registers and confectionary and food offers in some areas.
According to the Journal, Walmart has no plans to eliminate all cigarette sales, and the changes are being made to make better use of space. The company refused to reveal how many of its 4,700 outlets in the United States will no longer sell cigarettes.
We are always looking at ways to meet our customers’ needs while still operating an efficient business, Walmart said in a statement. As a result of our ongoing focus on the tobacco category, we have made the business decision to discontinue the sale of tobacco in select stores.
Altria was down 3.1% to $51.97 at 12:57 p.m. in New York, after falling as much as 3.9% in the previous session, the worst intraday decrease since March 8. After soaring as high as 1.2% earlier in the day, British American Tobacco Plc was barely changed in London. Imperial Brands Plc, which makes Kool cigarettes, gained less than 1%, trimming previous gains.
The stock of Walmart increased by 1.5% to $145.62.
Retailers have the right to choose what products they want to sell, Altria spokesman Steven Callahan said by telephone. We value the relationship we have with the more than 200,000 retailers across the country.
According to Goldman Sachs Group Inc. analyst Bonnie Herzog, Walmart’s move to stop selling cigarettes in some U.S. stores will not impact tobacco companies. She estimates that the Bentonville, Arkansas-based corporation accounts for less than 5% of the cigarette industry’s volume.
Smokers will still purchase cigarettes, and they will simply go to other retailers such as convenience stores, dollar stores and tobacco shops, she said in a note to clients.
The retail behemoth isn’t the first to put a halt to cigarette sales. Target Corporation done so in 1996, and CVS Health Corporation did so in 2014. According to Herzog, Walmart’s cigarette volume per store is lower than CVS’s.
In 2019, Walmart ceased selling e-cigarettes. In recent years, the firm has tightened its policy on selling weapons and ammunition.
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