Cb sara lee


Published on

Published in: Business, News & Politics
  • Be the first to comment

  • Be the first to like this

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

Cb sara lee

  1. 1. 305-196-1 Sara Lee Corporation: Brenda C. Barnes’ Restructuring Strategies “Today, Sara Lee is embarking on an aggressive, strategic plan that will transform the entire enterprise into a tightly focused food, beverage and household products company. We are taking bold actions that will enable Sara Lee to compete more successfully in today’s dynamic marketplace and thereby generate consistent, long-term topline growth and bottomline profitability for our shareholders.” 1 – Brenda C. Barnes, president and chief executive officer of Sara Lee. “They’re trying to build upon what they have now. Once Sara Lee completes the divestitures, it will have a sizable amount of cash to push its “underutilized” brands into new categories, particularly in packaged foods”.2 – Wesley Moultrie, senior director at Fitch Ratings in Chicago. Sara Lee Corporation (Sara Lee) is a global manufacturer and marketer of high-quality, brand-name products like food and beverage, intimates and underwear, and household products (Exhibit 1). Sara Lee’s leading brands include Hillshire Farm and Jimmy Dean, Earth Grains, Douwe Egberts, Hanes, Playtex, Ambi Pur, Kiwi and Sara Lee. With headquarters in Chicago, Sara Lee has manufacturing operations in 58 countries and marketing operations in nearly 200 countries. Sara Lee operates through five segments: meats, bakery, beverage, household products and intimates and underwear. But having many brands resulted in lack of focus leading to decline in profits and stock price (Exhibit 2). Despite continuous restructuring since 1997, Sara Lee did not witness any growth. In addition, consumers’ shift towards more casual dressing affected its branded apparel business. The private label brands were also undermining Sara Lee’s premium priced products. Therefore, in February 2005, Sara Lee announced a major restructuring strategy under new CEO Brenda Barnes. Company officials said it would focus on the meat and bakery items that were the core of the 66-year-old company.3 Though some analysts welcomed the strategy, some were skeptical about the future growth of the company due to the changing consumer habits, obesity concerns and competition. Sara Lee’s Background Sara Lee was founded in 1939 when Canadian entrepreneur Nathan Cummings purchased the C. D. Kenny Company, a small distributor of wholesale sugar, coffee and tea in Baltimore, Maryland, US. Over the years, Cummings steadily expanded the corporation. In 1942, Cummings renamed the corporation Sprague Warner - Kenny Corporation after acquiring national packaged goods distributor Sprague, Warner & Company. Then he moved the headquarters to Chicago, and began an aggressive expansion plan. Cummings subsequently made many key acquisitions, including Reid, Murdoch and Company and its nationally known Monarch brand. Cummings soon purchased several grocery firms, and in 1945 changed the company’s name to Consolidated Grocers Corporation. The operation went public in 1946. 1 “USA: Sara Lee announces long-term growth & performance”, www.fibre2fashion.com, February 10th 2005 2 Kaiser, Rob “New menu at Sara Lee”, www.highbeam.com (Knight-Ridder / Tribune Business News), February 11th 2005 3 “Sara Lee Names CEO, Returns Focus to Food”, www.marketwatch.com, February 10th 2005 This case study was written by R Muthukumar under the guidance of Srinath Manda, IBSCDC. It is intended to be used as the basis for class discussion rather than to illustrate either effective or ineffective handling of a management situation. The case was compiled from published sources. © 2005, IBSCDC. No part of this publication may be copied, stored, transmitted, reproduced or distributed in any form or medium whatsoever without the permission of the copyright owner. Distributed by ecch, UK and USA North America Rest of the world www.ecch.com t +1 781 239 5884 t +44 (0)1234 750903ecch the case for learning All rights reserved Printed in UK and USA f +1 781 239 5885 e ecchusa@ecch.com f +44 (0)1234 751125 e ecch@ecch.com
  2. 2. 305-196-1 Sara Lee Corporation: Brenda C. Barnes’ Restructuring Strategies By 1953, sales had grown to over $200 million. The corporation was substantially diversified among food processing,packaging and distribution companies and to emphasize this trend, the company’s name became Consolidated FoodsCorporation (CFC) in 1954. In 1956, CFC bought the Kitchens of Sara Lee, a Chicago bakery having a strong position infrozenbakedgoods.4 During the same year, CFC entered the retail food business by acquiring 34 Piggly Wiggly supermarkets.In 1962, the company ventured overseas by acquiring Dutch canned goods producer Jonker Fris, plus a Venezuelansauce and vinegar company. In 1966, CFC acquired Oxford Chemical Corporation – a manufacturer of cleaning products,its first non-food company, and E. Kahn’s Sons Company, its first meat company. In 1967, the company achieved sales of $1billion. In 1968, CFC sold Piggly Wiggly Midwest supermarkets and acquired Bryan Foods Inc. Cummings served aspresident until 1970. Through the early 1970s, CFC also entered the direct sales, apparel and personal care industriesthrough acquisitions, and diversified into three distinct lines of business: Food and Beverage, Intimates and Underwear, andHousehold Products (Exhibit 3). John H. Bryan was elected as President and a Director of CFC in 1974 and was named CEO in 1975. In 1975, netsales of the company reached $2.4 billion. Bryan had overseen both the globalization of the corporation and the developmentof early diversification initiatives into five distinct lines of business: Sara Lee Foods, Coffee and Tea, Household and BodyCare, Foodservice and Branded Apparel. In 1980, sales reached $5 billion. Using one of its most respected brand names to enhance the public awareness aboutthe company, in 1985, CFC changed its name to Sara Lee Corporation to reflect the consumer marketing orientation of thecompany and the high-quality, well-known branded products marketed across the world. The company had become aglobal manufacturer and marketer of products from hot dogs to hosiery. In 1989, Sara Lee celebrated its 50th anniversarywith record sales of $10 billion. Sara Lee continued to buy small independent companies that suited its business. Over theyears, Sara Lee continued to develop each line of business, build brands, and expand into new markets. From cottonT-shirts to kosher meats, from furniture care to body care, strategic acquisitions helped the corporation’s outstanding growth.In 1994, net sales reached $15 billion. In 1998, net sales reached $20 billion. In 2000, C. Steven McMillan was named CEO and president of Sara Lee. Later that year he became the Chairman.The company enhanced its position in the meat snacks market in October 2001, by acquiring FHS, the US’ fourth largestmeat snack producer. During fiscal year 2002, Sara Lee made significant changes in the structure of its meat business in theUS, including the combination of ten distinct business units into three, the establishment of a single divisional headquartersand the creation of common order entry, manufacturing, distribution and customer service systems. In early 2004 Sara Lee introduced its latest cross-branding product: Senseo, a home coffee service system. In theend-2004, Sara Lee launched a new website — www.breadrules.com — dedicated to expose the myths and fad about thelow-carb diets compared to bread’s value. Sara Lee planned to add more whole grain products to enhance its bakery andbeverage business.5 But diversification into several non-core businesses and too many brands had been distracting thecompany’s focus and affecting the earnings.Setbacks Though Bryan developed Sara Lee into a global conglomerate with a huge portfolio of brands through many acquisitions,by the end of the 1990s, he struggled with the issues: a product lineup that had become far too diversified, a failure to wringfull value out of its most popular brands, and growth that was slowing down in the company’s biggest categories. He wantedto transform Sara Lee into a lean marketing machine and leave much of the manufacturing to others. In 1997, the companystarted selling noncore businesses and closed down more than 90 manufacturing and distribution facilities, and laid off 9,400employees. It also closed its Mark Cross leather goods business and sold its loose tobacco business to the UK’s ImperialTobacco for $1.1 billion. But the moves did not increase its profits or revenues. Also in 1998, 15 people died after eating tainted hot dogs and deli meats produced at a Sara Lee plant in Michigan. SaraLee recalled all hot dogs and packaged meats remained with consumers and distributors, as it was found that the productshad fatal food poisoning. The company settled class-action suits over the incident in May 2000.6 By 2000, the ratio of fixed4 In 1949, Charles Lubin started a bakery business introducing his first product, Sara Lee cream cheesecake, named after his then eight-year-old daughter. Sara Lee cheesecake had become his most popular product. He changed the name of the business to Kitchens of Sara Lee in 1951.5 Abelson, Jenn, “It’s no longer toast”, www.boston.com, February 22nd 20056 Tatge, Mark “Sara Lee’s New Clothes”, www.forbes.com, February 10th 2005 2
  3. 3. 305-196-1 Sara Lee Corporation: Brenda C. Barnes’ Restructuring Strategiesassets and net working capital to sales had fallen to 24% from 31% in 1997. It was well below that of rivals, such as Heinz(41%) and Kellogg (54%). On the other hand, annual sales growth fell to 2.5% since 1997; and operating profits had grownby only 4% a year. Apart from this, the share price had dropped by nearly half from its all-time high in 1998, reducing thegroup’s market value to a mere 75% of annual sales. 7 Sara Lee announced its reshaping programme in May 2000. McMillan started consolidating, streamlining, and focusingthe company on its core categories—food, underwear, and household products. He divested companies including ChampionEurope (Italy-based company marketing Champion branded apparel, licensed apparel, team uniforms, footwear andaccessories across Europe); Sara Lee Apparel Australasia; Sara Lee’s UK bakery operations; Argal (Spanish processedmeats company); Brossard (French bakery business); Ozark (Salad and deserts company). Two small regional bakeryoperations one in India and the other in China; PYA/Monarch (a leading food distribution company); Lyle & Scott (UK basedSportswear and Knitwear business); Georges Rech (UK based men’s wear business); and Well Hosiery (InternationalFabrics business representing more than $4.5 billion in revenue) were also divested. As of September 2001, he had sold 15 businesses, equaling over 20% of the company’s revenue, and laid off 13,200employees, nearly 10% of the workforce.8 McMillan used the cash from asset sales to strengthen brands that couldenhance Sara Lee’s growth. McMillan said that the effort would start paying off in the fiscal year ending June 30th 2003. Brand building was another major part of McMillan’s strategy. He increased the spending on marketing by 8% in 2001,to $2.3 billion, including a 30% increase in advertising.9 Though the apparel business accounted for 43% of sales, thegrowth was standstill. McMillan spent more on apparel brand building to boost profits. But analysts felt that apparel businesswas not a high value-added business. Even though McMillan cut costs through his reshaping plans, the company witnessed lackluster results. Despite this, hespent more money to add food operations such as bread maker Earthgrains Co., driving up Sara Lee’s debt by almost $2billion, to $5 billion. Aggressive cost-cutting helped to increase profits in the fiscal year 2001. But earnings fell from $2.3 billionin 2001 to $1 billion in 2002 while its revenues were $17.6 billion, a 6% increase over the previous year. When investorscalled over the company, McMillan again promised them to reshape the company into a focused business that would startgrowing in three years.10 In addition, in May 2003, Sara Lee found itself on the verge of an accounting scandal involving rebate payments togrocers. Federal investigators were probing into such payments at Dutch grocer Royal Ahold US Foodservice Division. Butthere was no evidence that Sara Lee made any improper payments. McMillan said that three of his sales people on theirown gave inflated rebate figures to US Foodservice’s executives and its auditor, Deloitte & Touche. Sara Lee said theSecurities & Exchange Commission had contacted it only to check the accuracy of US Foodservice’s numbers. Sara Lee’sbookkeeping reflected the deals accurately. However, the company’s stock price fell 24% to $17.62. 11 In mid-2003 the Sara Lee Bakery Group was slapped with a $5.25 million fine when the EPA12 determined that ozone-depleting chemicals leaked from refrigeration systems in many of its plants. The company agreed to pay the fine and spendan additional $5 million on repairs. Due to falling sales caused by more casual dressing habits, the company that year soldoff its Italian hosiery business, which represented its apparel operations in France, Italy and Spain. Robert G. Millen, co-portfolio manager at Jensen Investment Management, said that Sara Lee did not focus on keybrands and growth like its rival Procter & Gamble. That put it in a tough spot with big grocery chains. “Wal-Mart stocks at bestthe two top brands, and if Sara Lee’s isn’t one of those, it’s out,” 13 said Burt Flickinger III, managing partner at consultantStrategic Resource Group. Morgan Stanley analyst David Adelman also blamed Sara Lee’s decentralized structure.Pressurized by retailers, McMillan started consolidating businesses from 200 to 100.14 Unsatisfied with McMillan’s efforts,Adelman said, “Sara Lee has further to go. They still have remnants of a decentralized company, even with retail consolidation.They have a very diffuse brand portfolio.” 157 “Fashion victim”, www.economist.com, February 26th 20008 Forster, Julie “Sara Lee: Changing the Recipe—Again”, www.businessweek.com, September 10th 20019 Ibid.10 Gogoi, Pallavi “Sara Lee: No Piece of Cake”, www.businessweek.com, May 26th 200311 Ibid.12 Environmental Protection Agency - An agency of the United States government that is responsible for regulating environmental pollution and environmental quality. The EPA has been one of the leading agencies within the United States Government on the climate change issue.13 “Sara Lee: No Piece of Cake”, op.cit.14 “Sara Lee: Changing the Recipe—Again”, op.cit.15 Berner, Robert “One Tough Job: Get Sara Lee Cooking”, www.businessweek.com, July 1st 20043
  4. 4. 305-196-1 Sara Lee Corporation: Brenda C. Barnes’ Restructuring Strategies Though McMillan sold the non-core brands, remaining businesses were still under performing. McMillan blamed muchof Sara Lee’s performance on the weak economy. But analysts felt that the company also was not as successful as its rivalsin creating blockbuster new products. Kraft expanded its Lunchables line of boxed meals into a $1 billion franchise. SaraLee’s Jimmy Dean frozen croissants were selling well but it was not a national brand. In addition, Sara Lee had few bigbrands with one billion-dollar name like its Hanes lines of underwear and socks. In food and beverages, which accountedfor over half of Sara Lee’s sales, it had none. But Kraft Foods had seven billion-dollar food brands, ranging from its Kraftpackaged foods and Nabisco snacks to Oscar Mayer meats. 16 Meanwhile, the apparel division’s sales dropped to $6.4 billion in 2003 from $7.5 billion in 2001, as casual workplacedressing decimated hosiery sales and Sara Lee divested some apparel lines. 17 Analysts felt that the problem with SaraLee was due to its premium pricing. Profit had been under pressure in part because consumers had become moreprice-sensitive and were buying more of their clothing from discount retailers offering low-cost imports. Retailers like Targetand Wal-Mart Stores, had pushed branded consumer goods companies for discounts. And also, private store brands wereoften being placed on shelves side by side with branded goods to help drive the retailers’ own higher-margin private labelproducts. Some experts opined that McMillan was slow to push Sara Lee ahead of more general market trends. In February 2004, Sara Lee unveiled its new brand segmentation strategy aimed at channelizing resources behind thebrands with the most growth potential. McMillan reviewed the company’s long-term strategy of investing in its key brands,developing innovative products, investing in its organizational structure and focusing on cash generation, which resulted inrecord cash from operations of $1 billion for the first half of fiscal year 2004. He broke Sara Lee’s entire brands into foursegments and decided to invest more into the two most promising segments.McMillan believed that the brand segmentationstrategy would help to support the key growth brands. In mid-2004 Sara Lee announced the closure of five of its intimates,sportswear, and underwear production facilities, in an effort to consolidate its manufacturing. The cuts could result in upto3,900 layoffs in Puerto Rico, Honduras, and Mexico. In addition, the company announced plans to sell off 60 of its smallestbrands globally and re-invest proceeds in larger businesses with higher growth potential. But some analysts felt that it wouldnot help the growth, and they considered McMillan’s strategic goals too optimistic.18 Analysts felt that Sara Lee had a too diverse product mix. Sara Lee’s stock price had been both dramatically higher andlower than the average price. Inconsistency seemed to be its major problem, with its very diverse business mix causing themain problems of this inconsistency. Some experts felt that Sara Lee still held on to under-performing brands rather thandivesting them. Too many of its brands were not considered core to the company’s progress and were declining at aprecipitous pace. Many companies were simply divesting these brands/businesses, while Sara Lee was not doing this.Successfully managing these brands could add some clarity to the growth ability of the sales, earnings, and cash flow of thecompany. The combined failed restructuring charges at Sara Lee equated to about $3 billion in 2004 and was consideredas one of the largest restructuring programs of any large food company. But all the programs failed to improve the company’sportfolio. Its growth ability had remained relatively unchanged. To combat the weaknesses and improve the growth,McMillan said, “Our management team is very actively assessing further significant strategic portfolio initiatives”.19 In July 2004, Brenda C. Barnes was appointed as COO of Sara Lee.20 Making her first appearance at a Sara Lee’sanalyst conference in September 2004, Barnes gave some indication that the company would take a harder look at pruningits brands, as the company had continuous setbacks.Restructuring Strategies In January 2005, Sara Lee decided to sell its $1.8 billion European branded apparel business. Further, it wasconsidering other measures to shed weaker brands, and focus on its strongest businesses. The board replaced McMillanwith new CEO Brenda Barnes to shed the slow growth. In February 2005, Sara Lee announced a comprehensivetransformation plan to improve the company’s performance and long-term growth. The company built its transformation planupon three pillars: re-organizing its business operations around consumers, customers and geographic markets in order tobuild functional excellence, increase strategic focus, simplify the organization and eliminate layers; focusing its portfolio; and16 “One Tough Job: Get Sara Lee Cooking”, op.cit.17 “Sara Lee Faces End of China Quotas”, www.behind-the-seams.com, August 23rd 200418 “One Tough Job: Get Sara Lee Cooking”, op.cit.19 “Sara Lee Reduces 2005 Outlook; Shares Fall”, www.hoovers.com (AP Online), January 25th 200520 “One Tough Job: Get Sara Lee Cooking”, op.cit. 4
  5. 5. 305-196-1 Sara Lee Corporation: Brenda C. Barnes’ Restructuring Strategiesincreasing operational efficiency to fund growth.The company decided to focus purely on food, beverages and householdproducts. This was planned to be completed in July 2005. The company restructured its five businesses into three: NorthAmerican Retail would include the bakery, packaged meats and Senseo coffee retail businesses in NorthAmerica, targetingthe company’s brands at major retailers like Wal-Mart. Another unit, North American Foodservice, would target food-servicebusinesses such as restaurants and institutions and would include the bakery, coffee and meat foodservice businesses inNorth America. The third, Sara Lee International, would target brands outside North America and include the bakery andbeverage businesses outside North America, the global household products business. Barnes said, “By bringing our NorthAmerican businesses together in the Chicago area, we will provide a natural catalyst for sharing best practices and pursuinggrowth opportunities across the businesses, as well as provide great opportunities for career growth and development forour employees.”21 In line with its new organization, the company planned to make some dramatic changes to its portfolio, disposing offbusinesses not fitting with the strategic focus within the food, beverage or household products categories. Barnes said thatthe company would concentrate on a smaller number of well-positioned growth business segments. Sara Lee also decided to spin off brands totaling 40% of revenues, including its branded apparel business with suchnames as Hanes, Champion, and Playtex.22 In addition, the company decided to sell Direct Selling – a $450 million businessthat sold cosmetics, household products, apparel and other products in Mexico, Australia, Philippines and Japan; US RetailCoffee — a $300 million business with well-known, regional retail coffee brands such as Chock full o’Nuts, Hills Bros, MJBand Chase & Sanborn; and European meats business, with $1.1 billion in sales. 23 The sales and spin-off would create a leaner Sara Lee largely focused on food and household products, includingwell-known brands like Jimmy Dean, Ball Park hot dogs, Hillshire Farm lunch meats and Kiwi shoe polish. The new structurecould create savings of up to $800 million a year and the plan would cost about $1 billion in charges and expenses over thenext five years. Sara Lee also planned to reduce its cost structure across the entire enterprise. The centralization ofpurchasing would provide the company with the ability to leverage its size and scale. In addition, the company alsoplanned to eliminate excess administrative costs and non-value-added activities across the company. Barnes believedthat the re-organization would eliminate the need for several divisional headquarters, thereby reducing administrative costsover time. The company planned to reinvest a portion of cost savings, $250 million, in marketing, research and development.24 The company’s target was to reach an operating margin above 12% by fiscal year 2010.Company officials said that by2010, Sara Lee would have roughly the same operational profits (as that of 2004) despite 40% smaller revenue. “I’mthoroughly convinced that the organizational changes we are making are the single most important pillar of the restructuring,even more important than selling off the product lines”, 25 Barnes said.Sara Lee planned to use the proceeds from the salesto fund investment in its growth businesses, to pay down debt and position the company for future acquisitions, and tostrengthen its current balance sheet.Concerns Several analysts said that they were surprised by the scope of the plan. “What is left is a more manageable and highermargin company. Executing such a broad reorganization, however, poses some risks. They have their work cut out,because what will be left is a large food company and a somewhat small household products company, both of which wouldneed some reinvigoration. But at least it will be a substantially smaller company with the cash to invest without being distractedwith all these other businesses,” 26 said Wesley E. Moultrie, an analyst at Fitch Ratings. “Taking away layers will make someemployees vulnerable. And how do you change the work culture where there were no economies of scale betweenapparel and food, to just focus on food? It’s a challenge. But they can overcome it”, 27 said Marshal Cohen, chief industryanalyst with The NPD Group, Port Washington, N.Y.21 “USA: Sara Lee announces long-term growth & performance”, op.cit.22 Berner, Robert “A Crash Diet for Sara Lee”, www.businessweek.com, February 11th 200523 “USA: Sara Lee announces long-term growth & performance”, op.cit.24 “Fitch Affirms Sara Lee Following Transformation Announcement”, www.highbeam.com (Business Wire), February 10th 200525 “Sara Lee Names CEO, Returns Focus to Food”, op.cit.26 Ibid.27 Reyes, Sonia “Sara Lee Plans More With Less”, www.brandweek.com, February 14th 20055
  6. 6. 305-196-1 Sara Lee Corporation: Brenda C. Barnes’ Restructuring Strategies Financial experts said that the changes would allow Sara Lee to focus on its core brands with slightly higher profitmargins. Pam Murtaugh, president of Madison, Wisconsin-based Pam Murtaugh & Co., a management consultancy opinedthat with both Brenda and CJ Fraleigh, head NorthAmerican Retail, the company could improve. Similarly, Prudential EquityGroup analyst John McMillin and Ron Drane, an analyst and portfolio manager at Champaign’s Main Street Bank & Trustalso expected the positive growth of Sara Lee. A company official felt that marketing and managing the brands would helpSara Lee to keep up with consumers’ fast-changing tastes. “The trick with the whole plan is to have the resources that support growth behind the new ideas that we know we arecapable of generating. We are very optimistic that we can build a much stronger, much healthier business in thesecategories”, 28 said Barnes. Some analysts agreed that Sara Lee’s plan was a bold move, but were more reserved in their praise. They felt that SaraLee’s aggressive reorganization plan was long overdue and it had to cut much deeper if it planned to have the focusedbrand portfolio necessary to compete and had to invest more behind innovation and marketing of its brands.29 DavidNelson, an analyst with Credit Suisse First Boston in Chicago, was skeptical whether the changes would lower overheadenough and felt that the restructured company would have much higher taxes. But a section of analysts argued that only restructuring and layoffs could not give growth to the company. They felt thatSara Lee’s biggest trouble was that the company had many continuous restructurings, but nothing helped in its growth. Theybelieved that Sara Lee was heading towards a breakup in the next few years. Evan Morris, an analyst with Bank ofAmerica, opined, “We view these moves as less about creating value and more about avoiding further value destruction.”30 It is to be seen whether the restructuring would help Sara Lee to achieve its objectives.28 “New menu at Sara Lee”, op.cit.29 “A Crash Diet for Sara Lee”, op.cit.30 “New menu at Sara Lee”, op.cit. 6
  7. 7. 305-196-1 Sara Lee Corporation: Brenda C. Barnes’ Restructuring Strategies Exhibit 1 Sara Lee: Major Food Categories and Brands Category Brands Hillshire Farm, Sara Lee Bakery, Jimmy Dean, Bryan Foods, Ball Park franks, Sara Lee Foods Aoste (ham), Bimbo (dough), Earth Grains, Rainbo and IronKids fresh bread. Beverages Senseo Coffee, Superior Coffee, Maison du Café, Douwe-Egberts (coffee). Ambi-Pur (air fresheners), Champion USA (sporting goods), Kiwi (shoe care), Household Products Sanex (body care). Intimates and Hanes, Playtex, Leggs, Dim, Bali, JustMySize, Nurdie (hosiery), Lovable USA, Underwear Wonderbra, Barely There, Champion, Hanes Her Way, Just My Size, Unno. Source: “Corporate Food Pyramid-Sara Lee Corp.”, www.holology.com Exhibit 2 Sara Lee: Financials (1995-2004) Year Revenue ($ mil.) Net Income ($ mil.) Net Profit Margin Employees Jun 04 19,566.0 1,272.0 6.5% 150,400 Jun 03 18,291.0 1,221.0 6.7% 145,800 Jun 02 17,628.0 1,010.0 5.7% 154,900 Jun 01 17,747.0 2,266.0 12.8% 141,500 Jun 00 17,511.0 1,222.0 7.0% 154,000 Jun 99 20,012.0 1,191.0 6.0% 138,000 Jun 98 20,011.0 (523.0) -- 139,000 Jun 97 19,734.0 1,009.0 5.1% 141,000 Jun 96 18,624.0 916.0 4.9% 135,300 Jun 95 17,719.0 804.0 4.5% 149,100 Source: Colbert, Catherine “The Company Fact Sheet-Sara Lee Corporation”, www.hoovers.com Sara Lee: Stock Chart (2000-2004) Source: “ Sara Lee Corp.-Stock Chart”, www.advfn.com7
  8. 8. 305-196-1 Sara Lee Corporation: Brenda C. Barnes’ Restructuring Strategies Exhibit 3 Major Acquisitions of Sara Lee Year Acquisition 1968 Electrolux, Gant and Country Set, Canadelle 1971 Hillshire Farm and Rudys Farm 1972 Erdal, a Dutch company 1978 Douwe Egberts (coffee, tea, and tobacco; the Netherlands), Chef Pierre, manufacturer/distributor of frozen prepared desserts 1979 Hanes Corp., manufacturer/marketer of womens hosiery, foundation garments and swimwear, mens and boys underwear and cosmetics; Superior Tea and Coffee Company, nationwide distributor of coffee, tea and related products; and Gallo Salame, Inc., manufacturer of Italian dry sausage products 1980 Spanish household products company, Productos Cruz Verde 1982 Standard Meat Company, processor of meat products 1984 Jimmy Dean Meat Co., Nicholas Kiwi (shoe care and pharmaceuticals, Australia), 1985 Coach Leatherware International 1987 Bil Mar Foods, major producer of turkey-based products 1988 Adams-Millis Corporation, a manufacturer of hosiery products 1989 Champion Products (athletic knitwear), Dim (hosiery and underwear, France) Van Nelle, a Dutch company active in coffee and tea; and Hygrade Food Products, manufacturer of hot dogs, luncheon meats, bacon and ham 1990 The international manufacturer and marketer of intimate apparel products Playtex, Henson- Kickernick, Inc., manufacturer of high-quality foundations and daywear 1991 Rinbros, manufacturer and marketer of mens and boys underwear in Mexico; and Mallorca 1992 BP Nutritions Consumer Foods Group, Giltex Hosiery, Bessin Corporation, the furniture care businesses of SC Johnson Wax, a majority interest in Maglificio Bellia, S.p.A. and select assets of Mark Cross, Inc. 1993 SmithKline Beechams European bath and body care brands 1994 Joint venture with Kir Alimentos and Imperial Meats 1996 Skin care and sweetener brands of Bayer AG 1997 French meats company Aoste, Italian intimate apparel manufacturer Lovable Italiana S.p.A., and Brossard France S.A., a French manufacturer of bakery products 1998 Strouse, Adler, and Continental Coffee Products, NutriMetics and Café do Ponto 1999 Chock full o’Nuts, Wechsler Coffee, and the Hills Bros., MJB, and Chase & Sanborn coffee operations from Nestlé, D. Canale Food Services, Royal Ahold’s Dutch meat processing units, Meester and Nistria, and J.E. Morgan Knitting Mills 2000 U.K.-based Courtaulds Textiles and its intimate brands Gossard and Berlei, the number-one coffee-company in Brazil, Café Pilão, and the leading company in women’s underwear in Argentina, Sol y Oro 2001 St. Louis-based The Earthgrains Company, the number-two player in the US bakery market, and a major European bakery companySource: Compiled by ICFAI Business School-Case Development Centre from www.saralee.com.8