(Rewrites first paragraph to focus on sales, adds byline)
By Martinne Geller
NEW YORK (Reuters) - Sara Lee Corp reported
lower-than-expected quarterly sales Thursday, hurt by weak
demand for commodity meats and private-label bakery products,
sending the foodmaker's shares down 2.6 percent.
Adding to pessimism on Wall Street, the U.S. government cut
its forecast for world wheat harvests due to a devastating
drought in Russia.
Shares of other bread and cereal makers were also down in
morning trade, with Ralcorp Holdings Inc off 0.3
percent, Kellogg Co losing 1.4 percent and Campbell Soup
Co down 0.3 percent.
Sara Lee, which is searching for a new chief executive
after Brenda Barnes stepped down to recover from a stroke, said
it was confident it can cope with rapidly rising wheat costs in
2011 through commodity hedging and price increases.
Still, it forecast fiscal 2011 earnings of 88 cents to 95
cents per share from continuing operations. Analysts on average
were expecting 94 cents, according to Thomson Reuters I/B/E/S.
The company expects sales of $11.2 billion to $11.5
The company said net sales in its fiscal fourth quarter,
ended July 3, rose 4.2 percent to $2.77 billion, falling short
of the $2.86 billion expected by Wall Street.
Excluding the impact of an extra week during the period,
foreign exchange rates and acquisitions, adjusted sales fell
2.8 percent, partly due to lower volumes and prices.
Net income was $187 million, or 28 cents per share,
compared with a year-earlier loss of $14 million, or 2 cents
Excluding one-time items, profit fell to 19 cents per share
from 26 cents, hurt by investments in new product launches and
a drop in the market value of some commodities positions.
Volume in Sara Lee's North American retail segment fell 7.9
percent due to a significant drop for commodity meats, a
business the company is exiting.
Excluding that business, volume rose 1.8 percent, driven by
growth of Jimmy Dean breakfast sandwiches and sausages and
Hillshire Farm lunch meats and smoked sausage. Both volume
figures exclude the extra week.
In the bakery business, volume fell 3.1 percent, excluding
the extra week, as slightly higher shipments of branded breads
failed to offset weakness in private-label products due to
intense pricing competition.
Earlier this week, Sara Lee said Barnes was stepping down
permanently as chairman and chief executive and it had begun a
search for a successor. Barnes suffered a
stroke in May.
During her tenure, Barnes oversaw a major overhaul of Sara
Lee, looking to streamline the company's portfolio and focusing
on food and coffee.
Sara Lee has sold or spun off units that sell products from
clothing to air fresheners. By the end of this year it expects
to close on the sales of its body care and European detergent
business to Unilever and its insecticides business to
The company is also quietly seeking buyers for its bread
business, but has not launched a formal auction, sources said
Sara Lee shares were down 31 cents, or 2.1 percent, to
$14.16 in morning trade on the New York Stock Exchange.
Between May 14, when the company announced Barnes' medical
leave of absence, and the close of business on Wednesday, the
shares fell 1.6 percent.
(Reporting by Martinne Geller; Editing by Lisa Von Ahn)