Prepared Foods October 31, 2005 e-newsletter

Brenda Barnes became chairman of Sara Lee Corp. Named president and chief executive in February, Barnes is leading the company through a risky restructuring that could cement her standing as a marketing whiz.

She intends to restore Sara Lee's reputation as the company "nobody doesn't like" by focusing on its bread, cakes and beverages, while unloading the bras, pantyhose and other apparel lines it has marketed under dozens of brands.

The divestments are part of the company's shift to a returning to its roots as a food company. Sara Lee, which was known as Consolidated Foods Corp. until 1985, once was the owner of Eagle Food stores, Michigan Fruit Canners and Coach leather goods. The Coach brand was spun off four years ago.

Within five years, Barnes told shareholders, the company's profit margins would rise to 12% from the current 7%. However, gross revenue, as a result of the sale of the U.S. and European apparel and U.S. retail coffee divisions, will tumble from $ 19 billion to $ 14 billion.

It will be a swift transformation even for Barnes, who eight years ago won fame as the woman who walked away from a top job at PepsiCo North America to spend more time with her three children. Barnes, who turns down most requests for interviews and rarely speaks to the press, declined to be interviewed for this story.

Now, she is traveling the world serving as much as a cheerleader as Sara Lee's chief executive. Her message: reassuring employees and suppliers that the restructuring plan remains on track despite dismal performance that has driven shares down 20% this year.

In August, the company handed in its worst financial performance in years, reporting a fourth-quarter loss of $148 million due to dropping sales, higher commodity costs and millions in write-offs for reorganization expenses. Sales for the quarter dropped 5% to $4.75 billion, below the $5.05 billion analysts had expected.

For the fiscal year, the company reported a net profit of $719 million, or $0.90 a diluted share, down 43% from fiscal 2004, when it earned $1.3 billion, or $1.59 a diluted share.

"Our operating results have been below our expectations and yours," Barnes told shareholders. "We will deliver better results because we will be disciplined."

Overseeing a restructuring is not new for Barnes, who helped lead a similar reorganization of Pepsi's bottling division.

Source: Chicago Tribune