Lorillard Earnings Call Nuggets: Competitive Environment and the Brand’s Overall Performance

Lorillard, Inc. (NYSE:LO) recently reported its fourth quarter earnings and discussed the following topics in its earnings conference call.

Competitive Environment

Bonnie Herzog – Wells Fargo Securities: I guess my first question is on promotions based on what David just said, you were a little bit more promotional on Newport in the fourth quarter, than you’ve been historically, yet it didn’t necessarily drive as much retail share growth as I guess I would have expected, so should we assume going forward this year that these promos will continue and then possibly increase, especially David characterizing the competitive environment is still pretty tightened?

David H. Taylor – EVP, Finance and Planning and CFO: On a relative scale Bonnie. People sort of made a big deal last call about us having some promo. The amount of volume that we spent out at factory are the specially marked pack promos, is a fraction, it’s a very tiny percentage of our volume, I think it’s like 4% of our volume when some of our competitive brands in the Menthol segment are up at 40% to 50% of their volume with that type of promotion. So it wasn’t that big of a deal. The bigger issue that we did during the quarter was we didn’t come off promotion during certain periods of time to keep more of a steady state and we gained share on a total basis at about the same level that we had been gaining share throughout the year. The only place that with a variance was on the sequential share of Menthol and there’s reasons for that. But in general we were pleased with the way of the business. I mean fire and foremost you saw a volume trend that we like to be in that sort of flattish area of minus 1% to plus 1% and Newport Menthol responded beautifully right back into that historic trend and that compares to 1.5 or 2 points better than the trend had been in the previous couple of quarters. So I thought the business performed very well.

Bonnie Herzog – Wells Fargo Securities: So in having said so we shouldn’t expect to see much of a change then in your strategy with the brand this year or at least going on?