Sara Lee sees Q4 charges of $472 million
July 20, 2005
by FoodBusinessNews.net Staff
CHICAGO — Sara Lee Corp. on Wednesday said it expects to post charges of $472 million in the fourth quarter as it continues to shed parts of its apparel, beverage and household products businesses.
Under its ongoing restructuring plan, Sara Lee said it will record a $122 million charge in the fourth quarter, which includes $113 million in severance payments from laying off 1,956 employees at its branded clothing, drinks and household products businesses, and $9 million for backing out of leases and other contracts. After taxes, the charge is $81 million.
Earlier this month, Sara Lee said it would cut about 775 positions as it prepares to spin off its Champion sportswear division.
Sara Lee also said it may sell its European branded apparel, European packaged meats and U.S. retail coffee — except Senseo — and direct-selling businesses. Also, the company said it may spin off its $4.6 billion branded apparel Americas-Asia division.
There are nonbinding offers on the table for the European apparel and U.S. coffee units, Sara Lee said. The company conducted impairment reviews of both businesses and said it will post a fourth-quarter pre-tax charge of about $350 million, or $290 million after taxes.
"We are making the tough choices necessary to improve operational efficiency, reduce our cost structure and move the company forward," said Brenda C. Barnes, president and chief executive.
Analysts surveyed by Thomson Financial expect the company to earn 31c per share in the fourth quarter. In late April, Sara Lee said it expected fourth-quarter earnings to range between 30c and 32c per share, compared with 44c in last year’s period.
Sara Lee employs about 45,000 people. The company’s shares were unchanged at $19.64 in early morning trading on the New York Stock Exchange.