Yep i bought nearly all my cigs at CVS before i switched a few years ago, they always had the best prices (aside from Tobacco shops).
I wonder how much they considered the ancillary sales generated by selling cigarettes, ie the people who came in for cigs but also left with a soda, some milk, booze, etc. Those extra impulse sales are the same reason all the CVS's/Walgreens always have milk $.60-.$99 cheaper than the grocery store, if they get ya in for that you're bound to need/see something else.
Those lost sales have to be a decent chunk of change, in addition to the couple billion that dropping cigs cut out of their revenue numbers.