Sara Lee swings to loss in quarter

by FoodBusinessNews.net Staff
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DOWNERS GROVE, ILL. — Dragged down by numerous charges for significant items, Sara Lee Corp. suffered a loss of $17 million for the second quarter ended Dec. 27, which compared with income of $182 million during the same quarter of the previous year.

Sales for the quarter were $3,340 million, down 2% from $3,408 million during the same quarter of the previous year.

"Despite challenging economic times, our North American businesses continued their strong performance in the second quarter," said Brenda C. Barnes, chairman and chief executive officer. "The retail and fresh bakery businesses drove net sales and adjusted operating segment income growth, effectively managed their costs and pricing and gained market share in most key categories."

The North American Retail segment had an operating income of $74 million during the quarter, up 61% compared with $46 million during the previous year. Net sales in the quarter were $746 million, up 8% from $688 million during the same quarter of the previous year.

The North American Fresh Bakery segment had an operating loss of $14 million compared with an operating income of $3 million during the same quarter of the previous year. The results included a $30 million charge related to partial withdrawal liability relating to a multi-employer pension plan. Excluding the charges, the segment’s income rose sharply to $16 million. Sales for the quarter were $539 million, up 11% from $488 million during the same quarter of the previous year.

The North American Foodservice segment had an operating loss of $43 million compared with an operating income of $53 million during the same quarter of the previous year. The lower results reflected a $107 million pre-tax, non-cash impairment charge associated with goodwill at the food service beverage business. The segment had sales of $614 million for the quarter, up 1% from $611 million during the same quarter of the previous year.

"In our international businesses we are adjusting our plans and refocusing our resources to help offset significant economic downturns in many of our key markets, most notably Spain, France and the United Kingdom," Ms. Barnes said. "I have no doubt that we will weather these difficult times abroad and continue to deliver strong growth over time in these high-margin businesses."

For the six months, Sara Lee had income of $213 million, equal to 30c per share on the common stock, down 44% from $382 million, equal to 53c per share, from the same period of the previous year. Net sales for the six months were $6,689 million, up 4% from $6,462 million during the same period of the previous year.

For the full-year 2009, Sara Lee expects earnings per share to be in the range of 72c to 79c per share, which is a reduction of 27c per share compared with previously stated guidance.

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