Food maker Sara Lee reverses year-ago loss, results beats estimates as revenue rises

Sara Lee back to profitability, beats estimates

NEW YORK — Sara Lee Corp. returned to profitability in the fourth quarter after a quarter last year weighed down by a big tax charge.

The food maker also increased spending on marketing and new products in the quarter, which weighed on results. But its earnings beat analyst estimates as the company was able to make more money and bring down costs as it sells off units to focus on its core food business.

The maker of Jimmy Dean sausages and Hillshire Farm said Thursday it earned $187 million, or 28 cents per share, for the quarter ending July 3. Last year the company lost $14 million, or 2 cents per share.

On an adjusted basis Sara Lee earned 19 cents per share.

Revenue rose 4.2 percent to $2.8 billion, helped by an extra week in the quarter and the company’s ability to sell more items at higher prices.

Analysts expected 16 cents per share on revenue of $2.86 billion, according to Thomson Reuters. They exclude one-time items from their estimates.

The company did not provide an update on its search for a successor to CEO Brenda Barnes, who stepped down this week to focus on improving her health following a stroke. The 56-year-old had been on medical leave since May 14.

Marcel Smits, the company’s chief financial officer, had been handling CEO duties and will continue to do so until a new CEO is named. Sara Lee, based in Downers Grove, Ill., said its board is looking at both internal and external candidates.

Sara Lee has been cutting costs and trimming product lines under Barnes’ leadership. The company has sold off several of its international units that make items such as insecticides and body care products as it streamlines its business.

The company spent 20 percent more on marketing this year to boost its brands. It faces tough competition as food makers and retailers compete for shoppers’ dollars. Shoppers have cut spending in the weak economy and switched to less-expensive, generic products.

Sara Lee’s biggest units — North American retail and international beverages — posted gains in revenue, although the company sold nearly 8 percent less product in North America because it exited some meat businesses. Jimmy Dean breakfast sandwiches and sausage and Hillshire Farm lunchmeats did well. Sara Lee noted international growth for its Senseo single-serve coffee.

Sara Lee’s North American unit that sells to businesses such as hotels saw a smaller rise in revenue, although it sold nearly 20 percent less product because it’s exiting meat businesses where it doesn’t make much money. It’s also still seeing weak demand from hotels, restaurants and other businesses.

The company sold less product in both North America and international bakery, hurt by store brand competition and weakness in Spain.

For the fiscal year, the company earned $506 million or 73 cents per share. That’s up from earnings of $364 million or 52 cents per share in the prior fiscal year.

Excluding 57 cents per share of one-time items, including taxes and the value of the company’s international household and body care business, the company earned $1.08 per share.

Analysts expected 82 cents per share on revenue of $11.1 billion, according to Thomson.

Revenue fell just under 1 percent to $10.79 billion.

The company said for fiscal 2011 it expects earnings per share to range from 93 cents to $1.02, while revenue should range from $11.2 billion to $11.5 billion.

Analysts expect the company to earn 94 cents on revenue of $10.97 billion in fiscal 2011.