UPDATE: Sara Lee Narrows 4Q Loss;Gives Downbeat View For Year
August 12 2009 - 9:11AM
Dow Jones News
Sara Lee Corp. (SLE) posted a narrower fiscal fourth-quarter
loss, but the food maker's sales dropped as some of the company's
European operations continued to face pressure from private-label
competitors.
Excluding write-downs and other items, the company's earnings
for the quarter exceeded Wall Street's forecast. But Sara Lee gave
a downbeat forecast for its new year, projecting earnings excluding
divestiture gains of 84 cents to 90 cents a share on net sales of
$12.9 billion to $13.2 billion. Analysts polled by Thomson Reuters
were expecting 92 cents and $13.33 billion, respectively.
The income forecast is only slightly higher than the latest
year's 82-cent profit, with projected declines at Sara Lee's North
American foodservice unit nearly offsetting anticipated earnings
growth at the rest of the company.
The packaged-food industry has seen benefits as consumers cut
back on eating at restaurants and spend more on groceries. But the
food companies also face greater competition from cheaper
store-brand items.
Sara Lee's loss for the period ended June 27 narrowed to $14
million, or 2 cents a share, from $672 million, or 95 cents a
share. The latest quarter included a $207 million write-down on its
Spanish bakery business while the prior year had $850 million in
write-downs. Excluding items such as the write-downs, earnings were
flat at 29 cents.
Foreign-exchange fluctuations also dragged down sales in the
quarter. Net sales fell to $3.16 billion from $3.51 billion. The
drop was 1.3%, excluding divestitures and foreign-exchange
impacts.
Analysts polled by Thomson Reuters were expecting the maker of
its namesake cheesecake, Jimmy Dean sausages and Hillshire Farm's
meats to report earnings, excluding items, of 24 cents a share on
revenue of $3.27 billion.
Gross margin rose to 62% from 61.5% as volume fell 1.9% in the
North American retail business.
Sales in its North American fresh-bakery and retail segments
rose 8.5% and 5.9%. Sales fell in all other segments.
In April, Sara Lee said it was exploring options for its
international household and body care business, including a
possible sale, after receiving interest in the division. Wednesday,
it said it was continuing to consider "all alternatives" for the
segment, including a divestiture. The company has been in
restructuring mode since 2005, spinning off or selling
slower-growth businesses in the process.
Shares recently fell 2.7% to $10.51 premarket.
-By Anjali Cordeiro, Dow Jones Newswires; 212-416-2200;
anjali.cordeiro@dowjones.com
(Mike Barris contributed to this report.)