Reynolds American Inc. (RAI) has been making several changes to its management recently in order to fuel growth. After naming a new president and chief commercial officer for its subsidiary R.J. Reynolds Tobacco Company (RJR Tobacco) last week, Reynolds is now geared to make certain promotions within its management.
Reynolds has decided to promote Michael P. Auger, the current vice president of trade marketing development for R.J. Reynolds Tobacco Company, to the position of executive vice president of trade marketing. Robert D. Stowe, who currently holds the post, plans to retire at the end of 2014. In his 33-year tenure, Stowe served at the leading position in trade marketing organization.
In his 24 years of illustrious career, Auger boasts wide experience in trade marketing and a strong bond with R.J. Reynolds’ customers and trade marketing organization. Auger will be replaced by Colin M. Uffindell, the area vice president of trade marketing. Chris Gaskin, presently the senior director of consumer marketing, will succeed Uffindell.
Last week, Reynolds named Debra A. Crew (currently the president and general manager of PepsiCo Inc.’s (PEP) North America Nutrition division) as the new president and chief commercial officer of its subsidiary R.J. Reynolds Tobacco Company effective Oct 1, 2014. Crew is replacing Andrew D. Gilchrist, who will be appointed the executive vice president of Reynolds American effective the same day.
We expect the recent shuffling in management to help the company steer through the ongoing headwinds in the tobacco industry which has resulted in volume declines of the tobacco companies. In the recently concluded second-quarter fiscal 2014, volumes at RJR Tobacco segment declined 6.8% due to shift of demand to smoke-free alternatives. RJR Tobacco’s market share declined 0.1 percentage point year over year to 26.5% in the second quarter due to a drop in market share in non-core brands.
However, Reynolds has been exploring options to acquire its rival Lorillard Inc. (LO) since Mar 2014. In July, the owner of Camel brand cigarettes confirmed talks regarding the merger. The proposed merger is under surveillance of anti-trust authorities and is expected to close in the first half of fiscal 2015. (Read: Reynolds Confirms Talks Regarding Lorillard Acquisition)
Reynolds currently carries a Zacks Rank #3 (Hold). A better-ranked stock in the tobacco sector worth considering is Vector Group Limited. (VGR) carrying a Zacks Rank #2 (Buy).
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