Sara Lee Names CEO, Restructures
Sara Lee Corp. is shedding bras and underwear but keeping its cakes and deli meats.
The Chicago-based consumer products giant said Thursday that it planned to sell or spin off divisions with about $8.2 billion in revenue, more than half of that from apparel brands including Playtex and Hanes underwear.
It also named a new chief executive in a sweeping reorganization of its business.
After years of tinkering with a product mix that includes more than 150 brands as diverse as Jimmy Dean sausage and Champion sportswear, executives said Sara Lee would now home in on the meat and bakery items that are the core of the 66-year-old company.
Sara Lee named President and Chief Operating Officer Brenda Barnes, 50, as its new CEO, replacing Steve McMillan, 59, who will remain chairman until October.
The company said it would spin off its $4.5-billion U.S. apparel portfolio, which includes Champion sportswear and L’eggs hosiery, into a new public company.
The planned divestitures, most of which are expected to be completed over the next three years, represent about 40% of the company’s total annual sales of about $20 billion.
The plan would organize Sara Lee into three new divisions: North American retail, which would include its bakery, meats and Senseo coffee brand; North American food service, which would serve restaurants and food distributors; and international, which would include food, beverage and household products such as Kiwi shoe polish and Sanex shower gels.
Executives said the plan would cost about $1 billion in charges and cash expenditures over five years but eventually could generate annual savings of $575 million to $800 million. Money from asset sales would be used to pay down debt and position the company for future acquisitions, Barnes said.
Investors applauded the announcement Thursday, sending Sara Lee shares up 95 cents, or 4%, to $23.92 on the New York Stock Exchange.
The stock has mostly traded between $15 and $25 since mid-2000. The price tumbled 8.2% on Jan. 25, from $24.95 to $22.90, after the company cut its fiscal 2005 earnings outlook by 10%, citing higher raw material costs and a difficult European retail environment.
Barnes spent 22 years at PepsiCo Inc. before being named president and CEO at PepsiCola North America in 1996. She quit in 1998 to be with her family, and later served as interim president and chief operating officer at Starwood Hotels & Resorts Worldwide Inc. from November 1999 until March 2000.
She joined Sara Lee last year.
