Sara Lee's earnings gets boost from divestitures

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Related tags: Sara lee, Income

Sara Lee reported that Q4 net earnings more than tripled, mostly on
proceeds from divestitures and spin-offs such as Coach leather.

On August 2, the American consumer product group Sara Lee reported that Q4 net earnings more than tripled, mostly on proceeds from divestitures and spin-offs such as Coach leather, reports the Financial Times. Excluding the one-time items, operating profits declined about 4 per cent to $299m, or 37 cents a share. Sara Lee has embarked on an aggressive reshaping of its business portfolio and operations over the last year. Steven McMillan, chief executive, has looked to remould the company into three primary businesses - underwear and basic apparel, food and beverages, and household products. He has reaped nearly $3bn from selling or spinning off 12 operations such as PYA/Monarch, the food service unit, and Coach. However, continuing weakness in US retail and the strong dollar have hit the group's performance. According to Sara Lee, sales from continuing operations were flat in the quarter and operating income fell 1 per cent. Unit volumes, excluding acquisitions, fell 2 per cent. The group also warned that Q1 earnings per share would be 21-24 cents, below Wall Street expectations of 27 cents. However, the company recently bought the bakery group Earthgrains, for a total of $2.8bn, a deal that it hopes to close by early September.

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