021035 Sara Lee Earnings Rise 28 PercentOctober 24, 2002Chicago - Underwear and food maker Sara Lee Corp. reported a 28% jump in quarterly earnings, citing reduced operating costs and other dividends of its two-year company overhaul. Sara Lee, whose products range from Hanes underwear to Ball Park hot dogs to Endust furniture cleaner, posted net income of $308 million, or 38 cents a share, in its fiscal first quarter. That compared with $242 million, or 30 cents a share, for the same July-through- September period a year earlier. Excluding certain items, Sara Lee earned 37 cents a share and that was 3 cents higher than Wall Street's consensus estimate, based on a survey of analysts by Thomson First Call. Sales climbed 7% to $4.53 billion from $4.24 billion, reflecting the August 2001 acquisition of The Earthgrains Co., which tripled Sara Lee's bakery operations. Sara Lee shares fell 25 cents to close Thursday at $22.70 on the New York Stock Exchange. In addition to lower operating costs and increased sales of higher-margin products, the company said it benefited from an additional five weeks of Earthgrains's earnings, lower commodity costs and favorable foreign currency exchange rates. The strongest income gains came in the meats and underwear divisions, even though sales were down 2% and up 0.8%, respectively. Both were helped by lower raw materials prices as well as cost savings and production improvements as a result of the restructuring, in which Sara Lee disposed of dozens of units to focus on its core businesses. "We are beginning to realize benefits from the reshaping program that Sara Lee began two years ago," said Steven McMillan, the Chicago company's chairman, president and chief executive officer. He said the meats unit is continuing its strong performance in the second quarter, driven by increased retail and deli product sales. But Sara Lee Bakery sales and profits are expected to be flat as the company invests heavily in new product development and marketing initiatives to offset weakness in the U.S. bread market.
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