UPDATE 1-Carolina Group 1st-quarter profit falls

(Adds details on costs, sales)

NEW YORK, April 28 (Reuters) - Carolina Group CG.N, a tracking stock for Loews Corp's LTR.N Lorillard Inc cigarette business, posted a lower quarterly profit on Monday, hurt by lower investment income and costs related to the proposed spin-off of Lorillard.

First-quarter net income fell to $171 million, or 98 cents per share, from $189 million, or $1.08 per share, a year ago.

Net sales rose to $921 million from $913 million a year ago, due mostly to price increases.

Selling, advertising and administrative expenses rose to $100 million from $82 million a year ago, due to costs related to the proposed spin-off of Lorillard from Loews and higher legal expenses.

Investment income fell to $11 million from $34 million a year ago, due in part to lower yields and a lower average invested asset balance. (Reporting by Martinne Geller, editing by Dave Zimmerman)