Juul Tells Investors Sales Are Climbing Again Despite Flavor Pullback

(Bloomberg) -- Juul Labs Inc. told investors that it has recovered from a brief dip in sales of its trendy e-cigarette late last year, stemming from the company's decision to pull some flavored vape options off shelves in the U.S. thanks to their surging popularity with underage users. 

In a letter to investors in May, Juul said its first-quarter sales were $528 million, an increase of about 23% from the previous quarter's revenue, which it said in the letter was $430 million, according to a person briefed on the document who asked not to be identified because the details are private. The company said it was buoyed by strong international growth.

The surge in sales shows that the company's response to reports of rising teen use of its products hasn't hobbled its growth prospects. In November, Juul opted to stop selling certain flavors of its nicotine pods in stores to mitigate its breakaway popularity with underage users. That move led to a small drop in sales in the fourth quarter of last year.

Today, Juul sells its vape devices and pods in 10 markets outside of the U.S. It's also planning further international expansion, according to an April earnings call from Altria Inc., which bought a 35% stake of the company in December. Altria, which sells Marlboro cigarettes in the U.S., said that Juul's U.S. shipment in the first quarter grew to 175 million refill pods, up from 64 million a year earlier.

Juul declined to comment. Unlike in its previous investor letters, Juul didn't specify its losses or profits for the quarter. In the fourth quarter, the company told investors its adjusted loss was $70.4 million. The letter in May said the company had more than $700 million in cash on hand, according to the person.

As Juul grows in popularity, it has faced increasing scrutiny from regulators in the U.S., India and elsewhere, and its critics say the company has hooked a generation of nonsmokers on a new form of nicotine. Juul has long maintained that it is working to curb its underage use problem and that its product helps adult cigarette smokers quit and switch to e-cigarettes as an alternative.

Altria Chief Executive Officer Howard Willard acknowledged the dual nature of the company in the recent earnings call. “We know,” Willard said, “that the epidemic of youth e-vapor usage threatens the opportunity for harm reduction for adult smokers.”

To contact the editor responsible for this story: Anne VanderMey at avandermey@bloomberg.net, Mark Milian

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