Sara Lee Corp Chief Executive Brenda Barnes will step down permanently as CEO and chairman after suffering a stroke, and the company said Monday it has begun a search for her successor.
Barnes, 56, has been on medical leave from the food maker since May 14. She became CEO in 2005 and led a major restructuring at the company, whose brands include Sara Lee baked goods and Jimmy Dean sausage.
Like most packaged food makers, Sara Lee has been grappling with weak consumer spending and heavy promotions at the grocery store. Its bread business has been hit hard by lower-cost rivals, including store brands.
Sara Lee said Chief Financial Officer Marcel Smits will continue as interim CEO and Mark Garvey will continue as interim CFO. The company is considering both internal and external candidates to replace Barnes, with top contenders from within the company including Smits and Christopher J. (CJ) Fraleigh, its head of retail and foodservice in North America.
James Crown, an independent director, will remain chairman of the board, a role he assumed when Barnes went on leave. Crown will continue to lead the Office of the Chairman, which also includes Smits and Fraleigh.
Barnes has also resigned from Sara Lee's board and will not stand for reelection at the annual meeting in October.
Shares in Sara Lee were down 1 cent at $14.83 midday on the New York Stock Exchange. Through Friday, the shares had gained 1 percent since Barnes' leave of absence was announced.
NO STRATEGY CHANGE SEEN
Morningstar analyst Erin Swanson does not expect any swings in strategy during the search for a successor.
"We don't anticipate a change in Sara Lee's strategic direction over the near term," Swanson said. "In terms of who they appoint to lead Sara Lee, I think it's too early to tell."
Smits joined Sara Lee as CFO in October from Dutch telecommunications leader KPN . He also has a food and personal care products background, having worked for 13 years at Unilever Plc earlier in his career.
Fraleigh, who is also an executive vice president of Sara Lee Corp, joined the company in January 2005 as CEO of its food and beverage business. He was named COO of North America in 2007 and to his current position in 2009.
Prior to joining Sara Lee, Fraleigh worked at General Motors Co and PepsiCo Inc , where Barnes has also worked.
Sara Lee credited Barnes with transforming its business by exiting low-margin segments. She focused on businesses like food and coffee, while divesting lines like the Hanes underwear operation.
The company has reached agreements to sell its body care business to Unilever and has sold parts of its Ambi Pur air freshener business to Procter & Gamble Co.
Sara Lee is quietly seeking buyers for its bread unit but has not launched a formal auction, sources familiar with the matter said last month. Sara Lee declined to comment at that time. (Additional reporting by Phil Wahba in New York and Shobhana Chadha in Bangalore; Editing by Aradhana Aravindan, Dave Zimmerman, John Wallace, Phil Berlowitz)