010150 Sara Lee Laying Off 7000 Worldwide

Chicago - Sara Lee Corp. is laying off 7000 employees worldwide this year as part of its slimming-down aimed at focusing the conglomerate on food, underwear and household products, a spokeswoman confirmed.

The job cuts will affect more than 4% of the company's 154,000 employees in 40 countries.

Spokeswoman Julie Ketay said the layoffs will come mainly from the company's two biggest operations - intimates and underwear along with food - with none in its household products business or operations in its headquarters city of Chicago.

Specifics have not yet been worked out but they will not be centered on any one geographic area, she said.

The layoffs were first disclosed by chief financial officer Cary McMillan in a conference call with securities analysts following the release of the company's quarterly earnings report Wednesday, in response to a question about costs associated with the reshaping, Ketay said.

“We will be consolidating some of our operations around the world,” the spokeswoman said. “This is a continuation of our reshaping program that we began last May.”

The job eliminations are not directly related to the company's announcement that it intends to sell off eight more of its 100-plus businesses, she said.

Further layoffs are not anticipated now, but “everything is relative to the business environment,” Ketay said.

The company has sold or closed more than 100 plants since 1997.

Sara Lee shares, which fell 5% Wednesday, slipped another 19 cents to $21.56 Thursday morning on the New York Stock Exchange.

The widely diversified company, whose brands range from Ball Park franks, Pickwick Tea and its namesake baked goods to Wonderbra, Hanes underwear, Endust furniture polish and Kiwi shoe polish, is overhauling operations to focus on fewer brands.

Its food operations have struggled in recent years due to falling bakery sales and fallout from a December 1998 packaged meats recall, and now retail results are being hurt by the U.S. economic slump.

Since C. Steven McMillan took over as president and chief executive last year, Sara Lee has announced plans to divest 14 companies, including its U.S. food service distributor PYA/Monarch, which it sold last month to Royal Ahold subsidiary U.S. Foodservice for $1.57 billion.

But the changes, aimed at long-term improvements, haven't paid off immediately. The company reported a 1% drop in operating income in the last three months of 2000, blaming a weak euro and an industrywide retail slowdown which prompted it to scale back its outlook for this quarter.

Sara Lee had $17.5 billion in worldwide sales in its 2000 fiscal year.

Analyst John McMillin said in a research note for Prudential Securities that the consolidation “should leave a more focused and easier company for investors to understand and management to run.”

But “the question of when Sara Lee will become a consistent company again is a good one,” he said.

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