WAL-MART DROPPING TOBACCO FROM ALL 122 CANADIAN STORES

LISA SAXTON

TORONTO -- Wal-Mart Canada said it would stop selling tobacco products at its 122 Canadian stores as soon as current stocks were depleted.

The chain, a wholly owned subsidiary of Bentonville, Ark.-based Wal-Mart Stores, has voluntarily stopped ordering tobacco products and will let inventories sell down.

In a statement, Bruce West, president of Wal-Mart Canada, said this represented "a prudent business decision that respects emerging government regulations and recognizes the difficulty we have had enforcing laws to prevent the sale of cigarettes to minors in our self-serve environment."

West said the decision was supported by the high costs associated with the sale of cigarettes, the desire for a consistent national policy in its stores and the company's plans to be a more proactive consumer force. Checking the identification of youthful-looking cigarette purchasers had been a problem because cigarettes are not kept behind a counter and because customers generally purchase many other products at the same time, explained Edward Gould, corporate spokesman.

Gould also noted that Canadian tobacco products carried very modest profit. "And by the time you factor in the labor of constantly stocking a product that's turning over rapidly, you have labor costs on virtually nil profits; there's no return in it."

The Canadian government "is aggressively promoting programs to reduce smoking under what it calls the Tobacco Demand Reduction Strategy," Gould said. "And, at the same time, by year's end, the province of Ontario is expected to enact Bill 119, or The Tobacco Control Act, which would forbid the sale of tobacco at any retail organization that has a pharmacy."

Gould said the reasoning behind this act is the belief that cigarettes shouldn't be sold in places designed to promote health and well-being.

Currently, Wal-Mart Canada operates pharmacies in 39 of its 41 Ontario units. However, the company plans to operate 120 pharmacies throughout the country by the end of this year.

"What's significant is that Wal-Mart came out in advance of all the legislation. We don't care what happens in the balance of the country; we're going to make it a uniform policy," said Gould, who noted that Bentonville understood the move of it's northern subsidiary.

"The decision was based on our assessment of the Canadian regulatory environment and the unique dynamics of the Canadian marketplace."

As expected, the decision has been heralded by health organizations and the government, but, surprisingly, Gould said, there hasn't been any flak from manufacturers.