From Jimmy Dean sausages to Kiwi shoe polish to its namesake baked goods, Sara Lee's brand cupboard is well stocked. But the company's biggest...
From Jimmy Dean sausages to Kiwi shoe polish to its namesake baked goods, Sara Lee’s brand cupboard is well stocked.
But the company’s biggest unit is little known in the United States. Sara Lee’s international coffee and tea division, with such brands as Senseo and Maison du Caf, generated $375 million in pretax operating earnings for the nine months through March 31, or 43 percent of the company’s $880 million in operating income, before corporate expenses.
The unit is selling more products at higher prices, and the weak dollar makes those receipts more valuable.
Chairman and Chief Executive Brenda Barnes highlighted the unit after reporting an 82 percent jump in overall earnings for the first quarter.
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“That’s a fantastic business,” she told analysts. “It’s got a great margin, we’ve got great trademarks, and we have lots of areas for growth opportunity.”
To be sure, the company is facing rising prices for ingredients, including raw “green” coffee beans, which caused the most recent profit to lag expectations.
Sara Lee began a turnaround plan in 2005, selling or spinning off units such as U.S. and European clothing, European meats and U.S. retail coffee.
Deutsche Bank analyst Eric Katzman says investors hoped the most recent quarter would be a turning point.
The profit-expectation miss means “the dark tunnel seems a little longer than had been hoped.” He rates the stock “hold.”