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 below expectations. The stock was recently down 8% to 9.95.

The packaged food company said it is facing price competition in its North American bakery business as some competitors push to gain share by cutting prices sharply. Sara Lee said it won't attempt to drive volume through unjustified price cuts in any of its categories. The company's bakery business sells fresh and frozen baked goods like breads and cheesecakes.

For the coming year, the company projected earnings excluding items 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 earnings of 92 cents a share and on revenue of $13.33 billion.

The income forecast is only slightly higher than the latest year's profit of 82 cents a share, with projected declines at Sara Lee's North American foodservice unit nearly offsetting expected 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 a share.

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. Sara Lee said Wednesday that it would provide an update on that move in the "near future." The company has been in restructuring mode since 2005, spinning off or selling slower-growth businesses in the process.

-By Anjali Cordeiro, Dow Jones Newswires; 212-416-2200; anjali.cordeiro@dowjones.com

(Mike Barris contributed to this report.)