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Walmart Ends Cigarette Sales in Some Stores; Altria Slides

Walmart is exiting cigarettes in some stores in states such as California, Florida, New Mexico and Arkansas.

Walmart Ends Cigarette Sales in Some Stores; Altria Slides
An employee slips a "French Savoir Faire" label band on to a freshly rolled cigar.[Photographer: Balint Porneczi/Bloomberg]

Walmart Inc. is ending cigarette sales in some stores, citing a “business decision” to take a step back from the sale of tobacco. The move hit tobacco stocks, and Altria Group Inc., which sells Marlboro cigarettes in the U.S., fell the most in almost three weeks. 

The shift follows an internal debate at Walmart and affects stores in states including California, Florida, New Mexico and Arkansas, the Wall Street Journal reported earlier, citing people close to the situation it didn’t name. In some locations, the cigarette shelves are being replaced with self-checkout registers and offers of candy and food. 

Walmart has no plans to stop all cigarette sales, and the moves are being made to use space more efficiently, the Journal said, citing a company spokeswoman. The retailer declined to say how many of its 4,700 U.S. stores would stop selling tobacco. 

“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 fell 3.1% to $51.97 at 12:57 p.m. in New York after sliding as much as 3.9% for the biggest intraday drop since March 8. British American Tobacco Plc was little changed in London after earlier climbing as much as 1.2%. Imperial Brands Plc, the maker of Kool cigarettes, advanced less than 1%, trimming earlier gains. 

Walmart climbed 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.”

Neither BAT nor Imperial had an immediate comment.

Walmart’s decision to stop selling cigarettes in some U.S. stores won’t hurt tobacco manufacturers, according to Goldman Sachs Group Inc. analyst Bonnie Herzog. The Bentonville, Arkansas-based company represents less than 5% of cigarette industry volume, she estimated. 

“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 giant isn’t the first retailer to stop cigarettes sales. Target Corp. did so in 1996, while CVS Health Corp. did the same in 2014. Walmart’s cigarette volume on a per-store basis is less than what CVS’s volume was, Herzog estimated. 

Walmart stopped selling e-cigarettes in 2019. The company also made its policy on selling guns and ammunition stricter in recent years.

©2022 Bloomberg L.P.