* Q2 EPS $1.73 vs Wall St $1.61 view
* Shipments fall less steeply than rest of industry
* Shares up 1.4 pct (Adds context, CEO comment, stock activity, byline)
By Emily Stephenson
CHICAGO, July 26 (Reuters) - Cigarette maker Lorillard Inc LO.N reported a higher-than-expected quarterly profit as its Newport brand increased domestic market share.
While shipments for Newport and other brands decreased from a year earlier, the rest of the tobacco industry suffered worse declines, Lorillard said. The company's shares rose more than 1 percent.
"Lorillard outperformed the industry in each of the first two quarters of this year and achieved record retail market shares," Chief Executive Officer Martin Orlowsky said in a statement.
The industry previously expressed concern that a large increase in the U.S. tax on tobacco last year, which companies said skewed purchase patterns in 2009, would hurt shipments this year.
Orlowsky said the industry also faced pressure from the recession, expanding smoking restrictions and state taxes on cigarettes.
Cigarette makers Philip Morris International Inc (PM.N), its parent Altria Group Inc (MO.N) and Reynolds American Inc RAI.N posted higher-than-expected profits last week and raised 2010 forecasts. The companies said higher prices for cigarettes helped offset declining demand.
Lorillard said second-quarter net income fell to $263 million, or $1.73 a share, from $286 million, or $1.71 a share, a year earlier.
Analysts on average had expected earnings of $1.61 a share, according to Thomson Reuters I/B/E/S.
The company said domestic wholesale shipments fell 0.6 percent, compared with an industrywide decrease of 7.1 percent.
Lorillard said its Newport brand increased domestic market share to 10.9 percent from 10.4 percent.
The company's shares were up 1.4 percent at $77.40 in early New York Stock Exchange trading. (Reporting by Emily Stephenson; Editing by Michele Gershberg and Lisa Von Ahn)