Sara Lee’s Sales Rise in First Quarter

Sara Lee Corporation, Chicago, reported that sales for the first quarter of fiscal 2002, ending September 29, 2001, rose 1% to $4.5 billion, up 1%, but diluted earnings per share (EPS) fell 10% to $.26. Unit volumes, excluding acquisitions and divestitures, increased 3% during the quarter, with the strongest gains in the company’s knit products and household products operations. Household product sales rose 8% during the quarter to $509 million and operating income increased 3% to $68 million.

In May 2000, Sara Lee Corporation announced a reshaping program to focus the company’s operations on three business segments-food and beverage, intimates and underwear, and household products-and a number of non-core business units were sold or exited during fiscal 2001 and fiscal 2002 in conjunction with this program. Excluding these divested businesses, sales increased 9% in the first quarter of fiscal 2002, reflecting the acquisition of The Earthgrains Company on August 7, 2001, combined with base business gains in packaged meats, knit products and household products.

“Sara Lee increased marketing spending behind our leading brands and invested in technology, despite some challenging market conditions, as we continued to reshape our business portfolio and consolidate our organization,” said C. Steven McMillan, chairman, president and chief executive officer of Sara Lee Corporation. “We are extremely pleased with the strong sales increases in household products and knit products, and the integration of Earthgrains, our largest acquisition ever, is already producing important gains for Sara Lee Bakery Group.”

The company also recently introduced a number of successful new products including a two-in-one toilet bowl cleaner/air freshener under the fast-growing Ambi Pur brand. To support these efforts, first quarter media advertising increased 11% and total advertising and promotion grew 2%.

Unit volumes for the household products segment’s four core categories-shoe care, body care, insecticides and air fresheners – grew 11% with increased sales in body care, insecticides and air fresheners. Unit volumes were particularly strong in the air freshener business, led by new product offerings such as Ambi-Pur Flush, a two-in one toilet bowl cleaner and air freshener that is currently sold in more than 30 countries. The product was successfully introduced under the brand name Ambi-Pur LiquiFresh in the U.S. in fiscal 2001 and continues to hold the leading market share in its category.

Sales from the company’s direct selling efforts, conducted by 800,000 independent sales representatives who deliver branded toiletries, cosmetics and fragrances directly to consumers in 17 countries, rose 8% over the first quarter of last year, and operating income increased 9%, excluding currency. Results were particularly strong at House of Fuller operations in Mexico.