021215 Sara Lee Shares Fall 5% on OutlookDecember 13, 2002Chicago - Shares of Sara Lee Corp., the Chicago-based food and consumer goods maker, fell more than 5%, a day after the company gave a modest outlook for fiscal second-quarter earnings. Analysts said investors may have been disappointed that Sara Lee, the maker of Jimmy Dean meat and Hanes underwear, did not provide a more bullish quarterly outlook after delivering a positive earnings surprise in the fiscal first quarter. In addition, Prudential Securities analyst John McMillin cut his rating on the stock to "hold" from "buy," citing the stock price appreciation and restructuring in Sara Lee's bakery division, where the company is trimming jobs. "We still believe Sara Lee is in the process of getting its act together, but we do not see another quarterly earnings surprise coming, which may disappoint some momentum-oriented investors," McMillin wrote in a research note on Wednesday. "Top-line trends remain mixed and additional costs are being absorbed in the bakery division, where headcount is being reduced and where unit costs have increased a bit from weaker fresh bread volume trends," he said. Shares of Sara Lee were off $1.18, or 5.1 percent, at $21.87 at midday on the New York Stock Exchange. Earlier, they dropped as low as $21.80. Sara Lee, which purchased breadmaker Earthgrains Co. about a year ago, is trimming 190 management and administrative jobs at its St. Louis-based bakery headquarters and regional offices, executives told an analysts' meeting in New York on Tuesday. After the layoffs, the company will employ some 500 people at the offices, about the same number as before the Earthgrains acquisition. Sara Lee spokeswoman Julie Ketay said the cuts were designed to lower costs. The company's chief financial officer, Theo de Kool, told analysts on Tuesday that Sara Lee believes "we can keep the (second-quarter earnings) number within the guidance we gave you before, which is 40 to 42 cents for the quarter." According to a poll by First Call Thomson Financial, analysts were expecting 42 cents a share in the quarter on average.
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