CVS 2002 Annual Report Download - page 4

To Our Shareholders
CVS Corporation has emerged from 2002 stronger, leaner and better positioned to capitalize on
the rich opportunities in pharmacy. We laid out an aggressive action plan to regenerate our strong
pattern of growth, and I am proud to report that we achieved what we set out to accomplish.
We achieved record sales in 2002, with total sales increasing 8.7% to $24.2 billion. Same store
sales increased 8.4%, with pharmacy same store sales growing 11.7%. Our earnings per share rose
12.2%, which is a greater increase than we originally projected.
Despite our success, uncertainty ruled the stock market in 2002 and adversely affected our share
price. Concerns about the economy, global instability, and a number of corporate scandals led to
nervous investors and a bear market. We are confident that, if we deliver continued strong results,
ultimately our value will be reflected in our share price.
Making it Easy for Customers
Our mission is to be the easiest pharmacy retailer for customers to use. We know
consumers are starved for time, so we are focused on making their trips to CVS
as easy and efficient as possible—in a sense to help them get more life out of
life. That means convenient locations, prescription renewal by phone or on
CVS.com®, drive-thru pharmacy service, one-hour photo service, clipless
coupons, and everything else we do to make their lives easier.
It also means having items in stock that customers need. We
implemented our Assisted Inventory Management (AIM) system for regular,
front-store merchandise throughout the company in 2002, driving sales
and enhancing customer service by improving our in-stock positions. AIM
decreases our inventories per store, while at the same time helping us to
have the right products in the right stores at the right times. Our pharmacy
business is the next target for the AIM system. We are currently conducting a
pilot test and plan to roll out the AIM system for pharmacy during 2003.
Our ExtraCare card program continues to build customer loyalty. With 33 million
members, ExtraCare is the largest and most successful retail loyalty program in America, and
we continue to upgrade the benefits to customers. About 50% of front-store sales come through
ExtraCare cardholders, representing an exceptional level of customer participation compared with
many other retail programs.
We remain fervent in our commitment to continually improve service to our customers. Superior
customer service drives financial performance for retail companies, and we are committed to delivering
extraordinary service—in all stores, every day, for every customer.
Positioned for Growth
We built 266 new stores in 2002, 174 brand new stores and 92 stores we relocated to superior
locations. We continued our penetration into new markets that offer high growth potential, opening
our first stores in Phoenix, and continuing our ongoing expansion into various Florida markets, as well
as Chicago, Dallas/Ft. Worth, Houston, and Las Vegas. In fact, 78 of our new stores are located in
these new market areas, positioning us right where demand is
strongest. We also continue to grow market shares in many of our
principal markets. We now have the #1 or #2 market share in
approximately 70% of the top markets where we operate.
We are
committed to
flawless execution
and extraordinary
customer service
to drive financial
performance.
We opened
266 new
CVS stores
in 2002.
2CVS Corporation