(Corrects paragraph 7 to say quarterly revenue fell 1.2%, not 2.9%)
(Reuters) -Altria Group Inc missed sales expectations for the first quarter on Thursday, as price-sensitive consumers switched to cheaper brands of cigarettes and smokeless tobacco products.
Hit by inflation, consumers have been trading down to affordable alternatives to the pricey traditional tobacco products that Altria sells, like the Marlboro brand family, which includes Special Select and Marlboro 72s.
Altria has been raising the prices of its cigarettes and smoke-free products to manage higher tobacco costs, driven by lingering industry-wide supply-chain challenges and exacerbated by the Russia-Ukraine crisis.
Analysts have struck a cautious note about the deteriorating price resistance towards Altria’s cigarettes and the impact of the industry-wide decline in cigarette volumes on its margins.
The company’s shipment volumes for smokable products fell by 11.1%, while peer Philip Morris International Inc missed its quarterly sales estimates on lower cigarette shipment volumes.
Altria said its Marlboro retail share of the total cigarette category was 42.0%, a decrease of 0.6 share points versus the prior year, as consumers whose disposable income has already been stretched by high inflation have become mindful of spending their dollars.
The tobacco giant’s revenue fell 1.2% to $4.76 billion in the quarter ended March 31 and missed analysts’ average estimate of $4.90 billion, while adjusted earnings came in line with expectations of $1.18 per share, according to Refinitiv data.
The John Middleton cigar parent also recorded a non-cash, pre-tax loss of $250 million on the disposition of JUUL equity securities for the three months ended March 31.
The company’s shares were down marginally in premarket trading.
(Reporting by Anne Florentyna Gnanaraja Sekar in Bengaluru; Editing by Pooja Desai)
