Lorillard to ‘Ramp up Investment Behind blu eCigs’

Targets better retail penetration across the United States

GREENSBORO, N.C. -- With the national retail roll-out and advertising campaign of blu eCigs just beginning in the third quarter of 2012, sales of the electronic cigarettes contributed $14 million to Lorillard Inc.’s total net sales for the quarter.

“The company continued to execute against its strategic plan as it began to invest in advertising, distribution and merchandising on blu eCigs, the leading e-cigarette brand acquired earlier this year,” said Murray S. Kessler, chairman, CEO and president. “The competitive environment, both in terms of pricing and product introductions, has clearly heated up through the year and is expected to continue in the fourth quarter. Therefore, our marketing plans for the immediate future are geared toward protecting consumer loyalty which is fundamental for continued profitable growth. At the same time, the company will ramp up investment behind blu eCigs as it further penetrates national retail distribution.”

During the quarter, which ended Sept. 30, total Lorillard wholesale cigarette unit volume decreased 2.1% compared to the corresponding period of 2011. Domestic wholesale cigarette unit volume also decreased 2.1% for the third quarter of 2012.

Changes in wholesale inventory patterns are estimated to have positively impacted year ago comparisons by approximately 160 million units. This was less than expected as wholesalers entered the third quarter with fewer units than year ago but further reduced inventory levels during the third quarter of 2012.

Additionally, the third quarter of 2012 contained one fewer shipping day (63) than the third quarter of 2011 (64), which had a 1.6% negative effect on volume. Adjusting for both the positive impact of the relative change in wholesale inventory patterns and the negative impact of one fewer shipping day in the third quarter of 2012, Lorillard domestic wholesale shipments were down 2.0% as compared to the third quarter of 2011.

“Lorillard once again strengthened its position in the U.S. cigarette market during the third quarter as it grew market share, sales, margins and average net pricing, all of which translated to strong EPS growth over last year,” Kessler said. “Notably, the company expanded its share leadership position in the menthol cigarette segment during the quarter despite intense competitive menthol promotional and new product activity, demonstrating the remarkable strength of its flagship brand, Newport.”

Greensboro, N.C.-based Lorillard Inc., through its Lorillard Tobacco Co. subsidiary, is the third-largest manufacturer of cigarettes in the United States. Founded in 1760, Lorillard is the oldest continuously operating tobacco company in the U.S. Newport, Lorillard’s flagship premium cigarette brand, is the top selling menthol and second-largest selling cigarette in the U.S. In addition to Newport, the Lorillard product line has four additional cigarette brand families marketed under the Kent, True, Maverick and Old Gold brand names.