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Industry-Leading Performance Across Several
Measures Characterizes the Year in Retail
Our retail stores continued to outperform competitors
and gain share in 2010, and we expect a similar out-
come in 2011. We led the industry with 2.1 percent
same-store sales growth; 2.9 percent in the pharmacy
and 0.5 percent in the front of the store. We also outper-
formed all drugstore chains in sales per square foot
and profitability measures.
We opened 285 new or relocated stores in 2010.
Factoring in closings, net units increased by 152 stores,
which equates to 2.9 percent retail square footage
growth. Over the next three years, we expect to add
approximately 150 net new stores annually. That would
increase our retail square footage growth each year by
2 to 3 percent. CVS/pharmacy
® entered nine new markets
over the past two years, and results have exceeded our
expectations. In 2010 alone, we opened our first stores in
Memphis, Omaha, St. Louis, and Puerto Rico.
As we accomplished with earlier acquisitions, we have
improved the performance of the Longs Drugs® stores
we purchased in 2008 across several key financial metrics.
By leveraging our systems, our focus on store brands,
our category mix, and our ExtraCare® loyalty card,
profitability in the Longs stores has improved signifi-
cantly. In addition, average store prescription volumes
have increased by more than 5 percent. Given the
much larger retail footprint and sales mix of the
acquired stores, we do not expect them to match the
sales productivity of our core CVS/pharmacy locations.
That said, we see significant upside and expect to close
the gap further over the next several years.
In the front of the store, our ambitious store brand
program generated more than $3 billion in sales in 2010.
Store brands now account for 17 percent of our front-end
total, and we believe that penetration can reach more
than 20 percent in the next two to three years. From
over-the-counter drugs to grocery items, we offer more
LETTER TO SHAREHOLDERS ( CONTI N UED)
A Message From Our Board of Directors
As Tom Ryan prepares to step down from his role as Chairman and Chief Executive Officer of CVS Caremark,
the Board of Directors wants to thank him for the enormous contributions he has made to the growth and
culture of our company over the past 35 years. Tom became President and CEO of CVS in 1994 when the
company had approximately 1,200 stores and was still a division of Melville Corporation. After overseeing
several very successful retail acquisitions over the years, Tom engineered the evolution of our model beyond
retail pharmacy to include MinuteClinic and the transformational merger with Caremark in 2007.
Today, CVS Caremark is the nation’s largest pharmacy care provider and the 18th-ranked company
on the Fortune 500. We operate more than 7,100 stores and a top-tier PBM that together generated more
than $96 billion in revenue in 2010. Since Tom took the helm, our market cap has grown from $4 billion to
roughly $45 billion, and we have averaged an 11.5 percent annual return to shareholders. Tom also developed
many key executives and assembled a talented team, including incoming CEO Larry Merlo. We are pleased
to have Larry assume the top spot and confident in his abilities to successfully lead the company forward. We
wish Tom all the best as he begins the next phase of his life.
– 16 –
CVS Caremark 2010 Annual Report