R.J. Reynolds Tobacco to Mail Coupons to Smokers of Its Brands
08/21/02
Winston-Salem, North Carolina, Aug. 16 (Bloomberg) -- R.J. Reynolds Tobacco Holdings Inc. has mailed coupons to smokers to counter a similar program started by Philip Morris Cos.
R.J. Reynolds, the second-biggest U.S. cigarette maker, mailed five coupons a person for $5 off a carton of cigarettes to some smokers of its Camel, Winston and Salem brands and $3 off for Doral cigarettes, spokeswoman Carole Crosslin said. She didn't know when the offers were mailed.
The promotion is a response to larger rival Philip Morris, which two weeks ago began sending $36 worth of coupons to Marlboro smokers, Prudential Securities Inc. analyst Robert Campagnino wrote in a report. Philip Morris had said last month it would spend $350 million more in the second half marketing its more expensive cigarettes.
``When the 800-pound gorilla of your industry starts throwing luggage around, we believe that you have to respond or risk getting knocked out,'' Campagnino wrote in the report. He has a ``buy'' rating on the shares and doesn't own them.
Campagnino reduced his forecast for R.J. Reynolds's third- quarter profit by 8 cents a share to $2.24 to reflect expenses from the promotion. He also lowered his forecasts for the fourth quarter and the year by 10 cents and 16 cents, respectively, to $1.78 and $8.10.
The $5 and $3 coupons were sent to smokers that R.J. Reynolds says buy only the company's brands. It also sent four $7.50-per- carton coupons and one coupon for $6 off of four packs to smokers who buy according to price, Crosslin said.
Shares of Winston-Salem, North Carolina-based R.J. Reynolds fell 17 cents to $59.12 at 4 p.m. in New York Stock Exchange composite trading.