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Sara Lee Corporation

Sara Lee Corporation

Three First National Plaza
Chicago, Illinois 60602-4260
U.S.A.
Telephone: (312) 726-2600
Toll Free: (800) 727-2533
Fax: (312) 726-3712
Website: http://www.saralee.com

Public Company
Incorporated: 1939 as C.D. Kenny Company
Employees: 154,900
Sales: $17.63 billion (2002)
Stock Exchanges: New York Midwest Pacific London Amsterdam Paris Swiss
Ticker Symbol: SLE
NAIC: 311611 Animal (Except Poultry) Slaughtering; 311612 Meat Processed from Carcasses; 311812 Commercial Bakeries; 311813 Frozen Cakes, Pies, and Other Pastries Manufacturing; 311920 Coffee and Tea Manufacturing; 315111 Sheer Hosiery Mills; 315191 Outerwear Knitting Mills; 325320 Pesticide and Other Agricultural Chemical Manufacturing; 325612 Polish and Other Sanitation Good Manufacturing; 325620 Toilet Preparation Manufacturing Sara Lee Corporation is a leading global manufacturer and marketer of brand-name consumer packaged goods within three major business areas: food and beverage (52 percent of fiscal 2002 revenues), intimates and underwear (37 percent), and household products (11 percent). Within food and beverage, Sara Lee focuses on three principal areas: packaged meats, bakery products, and coffee and tea beverages. The company claims to be the worlds leading producer of packaged meats through such brands as Hillshire Farm, Ball Park, and Jimmy Dean. In bakery products, the firm produces fresh and frozen desserts, breads, and doughs, including the famous Sara Lee cheesecake and Earthgrains bread. Through such brands as Douwe Egberts, Maison du Café, Hills Bros., Chock Full o Nuts, and Pickwick, Sara Lees beverage business holds one of the top two positions in coffee and/or tea in several European nations, is the leading coffee marketer in Brazil, and maintains the number three position in the U.S. retail coffee market. Sara Lees apparel operations focus on intimates, underwear, and legwear; the company holds leading share positions in these market sectors in North America, Europe, and several Latin American countries. The firms well-known apparel brands include Bali, Champion, Dim, Hanes, Hanes Her Way, Just My Size, LEggs, Playtex, and Wonderbra. The household products operation is Sara Lees most global business and has leading positions in four categories: shoe care, body care, air care, and insecticides. Brands include Kiwi shoe care products, Ambi Pur air care products, and Sanex body care products. Although seemingly disparate, most Sara Lee products would be considered staples, helping insulate the company from the effects of economic cycles. Sara Lee sells its products in more than 180 countries.

Early History: From C.D. Kenny to Consolidated Foods

Formally organized in 1939, what is now the Sara Lee Corporation spent the next three decades under the direction of founder Nathan Cummings. Although he retired from active management of the company in 1968, Cummings remained the largest stockholder until his death in 1985, when Sara Lee bought back 1.8 million common shares from his estate.

Born in Canada in 1896, Cummings began his career in his fathers shoe store. By 1917 he had built his own shoe manufacturing firm. Cummingss enterprise eventually expanded into a successful importer of general merchandise. This venture allowed him to purchase a small biscuit and candy company, which he later sold at a profit.

In 1939, at the age of 43, Cummings borrowed $5.2 million to buy the CD. Kenny Company, a small wholesale distributor of sugar, coffee, and tea established in 1870. The Baltimore-based company represented Cummingss first entry into U.S. markets, and he sought to increase the number of Kenny-label products.

Cummings broadened his geographic scope in 1942 with the purchase of Sprague, Warner & Company, a distributor of canned and packaged food nationwide. CD. Kenny was relocated to Chicago and renamed Sprague Warner-Kenny Corporation. Under the established Richelieu label, sales came to $19 million that year, allowing Cummings to begin a significant expansion through acquisition, a strategy the company has pursued consistently.

After several smaller acquisitions, in 1945 Cummings acquired Reid, Murdoch and Company, the producer of the nationally recognized Monarch label. After this acquisition, the C.D. Kenny Company changed its name to the Consolidated Grocers Corporation, and in 1946 Consolidated made its first public stock offering, with a listing on the New York Stock Exchange. The Monarch purchase boosted sales to $123 million in 1946.

Smaller food companies struggled through a difficult period in the late 1950s and early 1960s as operational expenses and competition increasedcontinual development of new products and large promotional budgets were typically the only way to keep shelf space in supermarkets. But small companies offered their already established brands to a large company such as Consolidated, saving the cost of internal development. By 1970, Cummings had supervised the purchase of more than 90 companies by pursuing family-owned businesses who consented to mergers.

In 1951 Consolidated consisted of more than a dozen companies, and in 1953 sales passed $200 million. They did not remain that high for very long, however. Sales in 1954, the year Consolidated Grocers changed its name to Consolidated Foods Corporation, dropped to $133 million. Sales fell another $15 million the following year, when after-tax profits were only slightly greater than $1 million and earnings per common share fell almost 40 percent.

Mid-1950s: Addition of Kitchens of Sara Lee

Cummings met these losses with further diversification. The Kitchens of Sara Lee, a five-year-old maker of frozen baked goods with annual sales of $9 million, was acquired in 1956 for 164,890 sharesnot Consolidateds biggest purchase to date, but eventually a significant one. The company had been founded by Charles Lubin, who had named it after his daughter, and the firms best-selling product was Sara Lee cheesecake. A slightly larger purchase of 34 Piggly Wiggly supermarkets marked Consolidateds first venture into food retailing. An even larger purchase, of the Omaha Cold Store Company, demonstrated Consolidateds preference for distribution and marketing operations rather than direct-to-consumer sales.

Consolidated continued a rapid acquisition pace into the 1960s with Shasta beverages and the Eagle Supermarket chain in 1961. L.H. Parke Company, Michigan Fruit Canners, and Monarch Food Ltd. of Toronto together added $35 million in sales for 1962. The corporation first went international in 1960 by buying a controlling interest in a Venezuelan vinegar company; a second foreign investment came in 1962, with the purchase of Jonker Fris, a Dutch canner. Although growth was rapid, analysts considered Consolidated stock a risk because dividend increases depended on purchases.

During the 1960s recently acquired Booth Fisheries reported a 16 percent rise in sales volume for 1962, up to $56.6 million. By following the industry trend toward packaging seafood for the convenience market, Booth Fisheries fought off fish shortages and normally unstable prices, raising division earnings from $2.35 per share to $3.22.

In 1966 Consolidated agreed to a Federal Trade Commission (FTC) order to spin off its supermarket division within three years, principally its Piggly Wiggly and Eagle supermarket chains. This agreement came as a surprise to analysts, because the industry expected leniency from the FTC because of the high cost of small-scale food production and distribution. But Consolidated Foods President William Howlett publicly welcomed the agreement, stating that Consolidated no longer wished to compete at the retail level with its other customers. Consolidated still kept its convenience retail outlets such as Lawson Milk, purchased in 1960.

As Cummings prepared for retirement, Consolidated searched for a larger share of European and American markets. New production facilities were planned for Shasta and Sara Lee in 1964, tripling the latters output, and sales that year topped $600 million. In 1966 Consolidated made two more important food purchases: E. Kahns Sons Company (the firms first meat company) and Idaho Frozen Foods.

Mid-1960s: Beginning of Nonfood Acquisitions

Between 1966 and 1967, Consolidated made eight of its first nonfood acquisitions, including Oxford Chemical Corporation, a maker of cleaning products; Abbey Rents, a home furnishings company; Electrolux vacuum cleaners; and the Fuller Brush Company. Consolidated also entered the apparel industry in 1968 when it purchased Gant shirts and acquired several other clothing makers during this period. Within five years, nonfood businesses comprised 50 percent of the companys profits. William Howlett became Cummingss successor in 1968, but Cummings remained a director, and the largest shareholder, until his death. Howlett left two years later because of disagreements with the founding director. Despite the turbulence of the decade, sales tripled and after-tax earnings increased fivefold.

William A. Buzick, Jr., became president in 1970, beginning a difficult decade for the corporation; by 1980, the selling price for a common share was almost 40 percent lower than 1970s purchase price. Although sales continued to rise, as a result of the diversification trend, Consolidated soon discovered the drawbacks of the strategy as well. Consolidateds profits rose only 4 percent from 1972 to 1973the year sales hit $2 billioncompared with an industry average of 17 percent. Sales continued to rise in 1974, but earnings dropped for the first time in 19 years as nonfood business did poorly. Meantime, Hillshire Farm, maker of packaged meats, was acquired in 1971.

Company Perspectives:

Sara Lees mission as a company is to feed, clothe and care for consumers and their families the world over.

During Buzicks five-year reign, Consolidated sold many of its food distribution businesses and production facilities. Buzick also increased the companys commitment to nonfood products with the purchase of Max Klein, Inc., a Philadelphia-based clothing company and Erdal (later Intradal), a Dutch personal care products company.

Nonfood activity peaked in 1975 as durable goods provided almost two-thirds of corporate profits. The diversification was prompted in part by the companys belief that federal restraints on the food industry would continue. In addition, economic constraints made Consolidateds growth goals difficult to achieve as only a food company. Under President Richard Nixons economic stabilization program of 1973, for instance, Sara Lee was allowed to increase prices on frozen baked goods only 6.35 percent; Consolidated had requested a 7.52 percent hike. Moving into nonfood businesses would make the corporation less dependent on federal decisions and less vulnerable to the antitrust suits that had impeded competitors.

Mid-1970s: Start of the John H. Bryan Era

Buzick left in 1975 and John H. Bryan became CEO; he was named chairman the following year. Bryans family-owned business, Bryan Brothers Packing, was a 1968 Consolidated purchase. Bryan quickly sold more than 50 companies, most of which were smaller acquisitions made in the early 1970s. Fuller Brush and four furniture companies were singled out as problem units and divested. Earnings recovered the following year to $77.5 million, and Consolidateds operating margin returned to 7.6 percent.

Bryan continued to value nonfood sales, however. For the next ten years, nonfood products continued to make up more than 50 percent of corporate income but only 30 percent of total sales. Purchases during the 1980s continued the trend toward solidifying durable goods production.

Bryans acquisition portfolio represented a more aggressive stance in all of its markets. Before the 1978 purchase of Douwe Egberts, a Dutch coffee, tea, and tobacco producer, only 11 percent of Consolidateds income came from abroad; by 1989 it made up nearly 30 percent. In 1979 Consolidated completed a hostile takeover of the Hanes Corporation, a family-owned undergarment manufacturer.

Despite difficultiespoor performance of some nonfood companies led to earnings losses in 1974 and 1975Consolidateds performance excelled by the end of the 1970s. Between 1967 and 1973, sales doubled to $2 billion and total assets topped $1 billion. These figures allowed the company to set a goal of doubling sales volume by 1980; the actual amount achieved exceeded $5 billion.

Key Dates:

1939:
Nathan Cummings buys C.D. Kenny Company, a small wholesale distributor of sugar, coffee, and tea based in Baltimore.
1942:
Sprague, Warner & Company, distributor of canned and packaged food, is acquired; company relocates to Chicago and is renamed Sprague Warner-Kenny Corporation.
1945:
Company changes name to Consolidated Grocers Corporation.
1946:
Company goes public with a listing on the New York Stock Exchange.
1954:
Company changes name to Consolidated Foods Corporation (CFC).
1956:
The Kitchens of Sara Lee, maker of frozen baked goods, is acquired; CFC also acquires 34 Piggly Wig-gly supermarkets.
1966:
Under order from the Federal Trade Commission, CFC agrees to divest its supermarket division; the company acquires its first meat company, E. Kahns Sons Company, and its first nonfood company, Oxford Chemical Corporation.
1968:
CFC enters the apparel industry with the purchase of Gant shirts.
1971:
Hillshire Farm is acquired.
1974:
John H. Bryan becomes company president, beginning a long reign as head of the firm.
1978:
CFC acquires Douwe Egberts, a Dutch coffee, tea, and tobacco producer.
1979:
The hostile takeover of undergarment maker Hanes Corporation is completed.
1984:
Jimmy Dean Meats is acquired.
1985:
CFC changes its name to Sara Lee Corporation; the company acquires the foreign subsidiaries of Nicholas Kiwi Limited, an Australian maker of shoe care and other products, and also buys Coach leather-ware.
1987:
Dutch household goods conglomerate Akzo is acquired.
1991:
Undergarment maker Playtex is acquired.
1998:
Sara Lee sells its tobacco unit to Imperial Tobacco Group.
1999:
Company acquires coffee brands Chock Full o Nuts, Hills Bros., MJB, and Chase & Sanborn.
2000:
Company acquires Courtaulds Textiles pic, leading seller of intimate apparel and underwear in the United Kingdom; partial interest in Coach is sold through an IPO; foodservice distributor PYA/Monarch is sold for $1.56 billion.
2001:
Remaining stake in Coach is spun off to Sara Lee shareholders; Sara Lee purchases the second largest bakery in the United States, The Earthgrains Company.

Bryans initial management goals were to keep the company diversified and decentralized, while keeping the corporate office responsible for financial control and strategic planning. Acquisition targets would be brands with leading market shares in new areas and integrating acquisitionslarge companies with established brands in Consolidateds markets. Chef Pierre pies, Superior Tea and Coffee Company, and Italian dry sausage product maker Gallo Salame, Inc. fell into the latter category, and were purchased in the late 1970s, building on Consolidateds pastry, coffee and tea, and meat market shares. Similarly, Jimmy Dean Meats was acquired in 1984.

Emerging As Sara Lee in the Mid-1980s

In 1985 Consolidated announced that it would change its name to Sara Lee Corporation. The name was chosen because it was the corporations most prominent brand name, and as a corporate name would give the company higher visibility and make advertising efforts more cost effective.

The first of two major foreign acquisitions came in 1985 when Nicholas Kiwi Limiteds foreign subsidiaries were purchased for $330 million, in addition to 14 percent of its Australian domestic operations. Kiwiseller of a variety of shoe care products, medicines, cleaners, and cosmeticscomplemented Intradal, Sara Lees Dutch subsidiary. Akzo, a Dutch conglomerate with annual sales of $720 million, was acquired in 1987 for approximately $600 million, the companys largest purchase ever. Another producer of household goods, Akzo was absorbed into Douwe Egberts and Kiwi. By mid-1987, just nine years since its first international venture, Sara Lee was among the largest U.S. multinationals, with foreign revenue reaching almost $2 billion, making up 24.1 percent of total sales, 26.8 percent of profits, and 40.5 percent of total corporate assets. Meantime, back home, Sara Lee acquired Coach Leatherware in 1985 and Hygrade Food Products, maker of Ball Park, Gril-lmaster, and Hygrade hot dogs, in 1989.

Although still very active in acquisitions, Bryan also drew praise for stressing internal product development. Return on total investment typically decreases in the wake of large purchases, but Bryan kept return on equity at more than 20 percent in nearly every year since 1985. This was especially unusual for a company whose growth was almost entirely through acquisition96 percent of Sara Lees 141 entries into new businesses were through acquisition between 1950 and 1986.

Bryan was responsible for easing the uncertainty of the 1970s, shifting the companys focus to the marketing of consumer products only. He also improved manufacturing efficiency and product development. In 1986 sales dropped from $8.1 billion to $7.9 billion, yet income increased $17 million. Domestic consumer and institutional food divisions reported the largest sales drop, as Shasta, Idaho Frozen Foods, and Union Sugar were divested and Popsicle was restructured and eventually divested. Bryan also introduced lower-priced items to complement the corporations premium Sara Lee and Hanes labels. Bryan hoped, with this tactic, to improve total sales volume as successfully as the meat division had done in the past. In 1989 the company began the divestiture of its foodservice operations, then its poorest performing division.

Further Acquisitions in the Early 1990s

During the early 1990s Sara Lee continued to grow through acquisition and increased its market presence abroad. During the first three years of the decade, it spent more than $1.7 billion in adding a variety of properties to the Sara Lee stable, including Playtex undergarments; Brylcreem; Mark Cross leather goods; hosiery companies in France (Dim S.A.), Spain (Sans, S.A.), Italy (Filodoro), and the United Kingdom (Pretty Polly Limited); the consumer food group of BP Nutrition; and Smith-Kline Beechams European bath and body care business.

Perhaps most significant among these purchases was Playtex. Coupled with such existing holdings as Bali, the 1991 acquisition of Playtex gave Sara Lee a commanding presence in the intimate apparel market in the United States, with overall market share of more than 31 percent and market share in some niche areas surpassing 65 percent. Although some competitors expressed concerns about the monopolistic nature of the combination, they made little headway with the free marketers of the Bush administration.

Ironically, Sara Lees spending spree within another areahosieryquickly came back to haunt the company. A combination of several factors converged to lead to declining hosiery sales starting in late 1992. In the midst of a recession in Europe, the newly acquired hosiery units in France, Spain, and the United Kingdom experienced increasing competitive pressure. Sara Lee also erred in replacing the managers of the firms with U.S. personnel not as familiar with the local markets. Most important, both in Europe and the United States, the company failed to recognize quickly enough the trend toward more casual attire both at the office and for social events and, therefore, the resultant decreased demand for formal hosiery. Because hosiery comprised 25 percent of overall apparel sales, the decrease in hosiery sales presented a significant challenge. In response, Sara Lee quickly moved to decrease hosiery capacity by closing two U.S. plants as well as a plant in France. Sara Lees apparel division also was realigned into a more flattened organizational structure.

Leading the way in these efforts was newly appointed president Cornelius Boonstra. A 20-year Sara Lee veteran with a strong background in operations, Boonstra provoked some disenchantment with his aggressive cost-cutting measures, which included reducing staff in the Chicago headquarters by 10 percent. Although praised by Wall Street for the cuts, several senior managers left Sara Lee soon after his appointment and continuing friction with other executives led to his resignation in early 1994 after only six months in the job. No one was immediately appointed to succeed him.

In another irony, in June 1994 Sara Lee announced a major restructuring of its European personal products operations, which included cuts much more severe than those imposed by Boonstra. The company took a $732 million charge mainly to reduce capacity in its hosiery operations. Several more plants were closed and more than 8,000 jobs were cut.

Rebounding from the difficult restructuring year of 1994, Sara Lee enjoyed record sales of $17.71 billion (a 14 percent increase over 1994) and record operating income of $1.6 billion in fiscal 1995, with 12 Sara Lee brands racking up sales in excess of $250 million. For the year, 40 percent of Sara Lees sales and 45 percent of its operating income were generated from its operations abroad.

Major Restructuring in the Late 1990s

After a relatively quiet couple of years on the acquisition front in fiscal 1995 and 1996, Sara Lee grew hungrier during the fiscal year ending in June 1997, spending nearly $700 million to gobble up several companies. The most prominent of these were Aoste, a French maker of processed meats; Lovable Italiana S.p.A., an Italian manufacturer of intimate apparel; and Brossard France S.A., a French producer of bakery products. Also during fiscal 1997, C. Steven McMillan was named president and chief operating officer of Sara Lee, with Bryan remaining chairman and CEO. McMillan, who had been executive vice-president, had joined the company in 1976.

In September 1997 Sara Lee embarked on a major restructuring designed to boost both profits, which had been growing by just 6 percent a year since 1992, and the companys lagging stock price. As part of a program called deverticalization, Sara Lee aimed to reduce its degree of vertical integration, shifting from a manufacturing and sales orientation to one focused foremost on marketing the firms top brands. As many of its competitors had doneparticularly those specializing in apparel and household productsSara Lee began outsourcing more of its manufacturing; the company also sold off more than 110 manufacturing and distribution facilities over the next two years. Nearly 10,000 employees, representing 7 percent of the workforce, were laid off. Sara Lee also exited from several noncore businesses. The Mark Cross leather goods operation was shut down, and Sara Lee sold its cut-tobacco unit, Dou we Egberts Van Nelle Tobacco, to Imperial Tobacco Group PLC for $1.08 billion in mid-1998. Proceeds from the divestments and the cost savings derived from the restructuring were earmarked for investment in the companys core brands and to buy back $3 billion in company stock.

In December 1998, while this restructuring was still being implemented, Sara Lee announced the recall of 35 million pounds of hot dogs and deli meats that were thought to have been contaminated with listeria, a life-threatening bacteria. The products were traced back to a plant in Zeeland, Michigan, run by the firms Bil Mar Foods Inc. unit. The contaminated meat was eventually blamed for 15 deaths, six miscarriages, and more than 100 illnesses. By 2001 Sara Lee had settled several civil lawsuits for less than $5 million, and the company also pleaded guilty to a misdemeanor charge of selling tainted meat and agreed to pay the maximum fine of $200,000 and to spend $3 million on food-safety research. Sara Lee also spent $25 million to renovate the Bil Mar plant. The tainted meat case hurt the companys profits, depressed its stock, and tarnished its credibility.

Meanwhile, Sara Lee completed several acquisitions in fiscal 1999 and 2000, with a particular emphasis on bolstering the firms coffee operations. During the former year, Continental Coffee Products Company, a U.S. producer of roasted and ground coffee, was acquired from the Quaker Oats Company. Sara Lee spent $1 billion during fiscal 2000 to acquire: Chock Full o Nuts Corporation, a U.S. coffee roaster and marketer; the North American coffee business of Nestlé S.A., including the Hills Bros., MJB, and Chase & Sanborn brands; Outer Banks Inc., maker of knit sports shirts; and Courtaulds Textiles pic, the number one producer of intimate apparel and underwear in the United Kingdom, under such brands as Gossard, Berlei, and Aristoc as well as private-label brands. At the end of fiscal 2000, McMillan moved up to president and CEO, while Bryan continued as chairman.

Early 2000s: Another Restructuring and Major Divestments

Despite the restructuring efforts of the late 1990s, Sara Lee continued to struggle. Profits had failed to grow at a faster pace, and annual sales growth for the five-year period from fiscal 1996 to fiscal 2000 was just 2.2 percent. The stock price, after jumping following the launch of the restructuring, was once again tumbling. In an attempt to reverse the companys fortunes, McMillan announced an even more ambitious restructuring in May 2000: Sara Lee would reign in its wide-ranging portfolio of businesses by focusing on three main areasfood and beverages, intimates and underwear, and household products; by reorganizing management to eliminate such duplicative efforts as running ten separate meat companies; and through a new round of divestments, including the leather goods company Coach, athletic apparel producer Champion, foodservice distributor PYA/Monarch, and the international fabrics manufacturing unit of Courtaulds. The restructuring efforts also would include the layoff of more than 13,000 employees, amounting to almost 10 percent of the workforce.

The divestment program proceeded in large part as outlined. In December 2000 PY A/Monarch was sold to Royal Ahold for $1.56 billion. In October 2000 Sara Lee sold off 19.5 percent of the newly named Coach, Inc. to the public, raising $118 million. The following April Sara Lee fully divested itself of its Coach holdings by spinning off the remaining interest to Sara Lee shareholders, netting $1.1 billion in the process. The Courtaulds fabrics manufacturing unit was sold to Spanish fabric maker Dogi in April 2001. Although Sara Lee eventually decided to retain its Champion business in the United States, it did sell off Champion Europe. A number of other smaller divestments were completed in 2001 and 2002 as well. Overall, the divestments equaled about 20 percent of company revenues.

Acquisitions were not a major feature of fiscal 2001, although Sara Lee did purchase Café Pilão Caboclo Ltda., the leading coffee company in Brazil, and Sol y Oro, the leading seller of womens underwear in Argentina. But then in August 2001 Sara Lee shifted back into a more serious growth mode by completing the largest acquisition in company history, that of The Earthgrains Company, purchased for $1.9 billion plus the assumption of $957 million in long-term debt. St. Louis-based Earthgrains was the nations second largest bakery, with annual revenues of $2.6 billion, and it specialized in fresh packaged bread and refrigerated dough. The bakery operations of Earth-grains and Sara Lee were combined within the newly named Sara Lee Bakery Group. In October 2001 Bryan retired, ending his long stint as company chairman. McMillan added the chairmans post to his duties. It remained to be seen whether the restructuring spearheaded by McMillan would prove more successful than that launched by his predecessor.

Principal Subsidiaries

Aris Isotoner, Inc.; Bali Company; Bryan Foods, Inc.; Continental Coffee Products Company; Earthgrains Baking Companies, Inc.; Gallo Salame, Inc.; Kiwi Brands Inc.; Playtex Apparel, Inc.

Principal Divisions

Ball Park Brands; Best Kosher Foods; Champion Products; Douwe Egberts Coffee Systems Americas; Hanes Hosiery; Hil-lshire Farm & Kahns ; Hygrade Food Products; Jimmy Dean Foods; King Cotton Foods; LEggs Products; Sara Lee Bakery; Sara Lee Bakery Worldwide; Sara Lee Direct; Sara Lee Hosiery; Sara Lee Intimates; Sara Lee Meats; State Fair Foods; Superior Coffee and Foods; Sweet Sue Kitchens.

Principal Operating Units

Sara Lee Bakery Group; Sara Lee Branded Apparel; Sara Lee Coffee and Tea; Sara Lee Foods; Sara Lee Household and Body Care.

Principal Competitors

Intimate Brands, Inc.; Kraft Foods Inc.; Interstate Bakeries Corporation; Nestlé S.A.; The Procter & Gamble Company; ConAgra Foods, Inc.; The Warnaco Group, Inc.; Colgate-Palmolive Company.

Further Reading

Added Polish: Consolidated Foods Plans Core Business Around Kiwi, Barrons, November 19, 1984, pp. 71 + .

Balu, Rekha, and Ernest Beck, Sara Lee Corp. Kicks Tobacco, Wall Street Journal, April 8, 1998, p. Bl.

Bednarski, P.J., For Sara Lee, the Land of Opportunity Is Hungary, Chicago Sun-Times, April 7, 1991, p. 51.

Byrne, Harlan S., Sara Lee Corp., Barrons, October 12, 1992, p. 51.

Cohen, Deborah L., Sara Lees Blunt-Spoken Chief, Crains Chicago Business, February 28, 2000, p. 1.

, Sara Lee Welcomes Quiet After Storm, Crains Chicago Business, October 25, 1999, p. 4.

Crown, Judith, He Didnt Do Things Like Sara Lee: Cost-Cutting, Style Led to Boonstras Quick Exit, Crains Chicago Business, January 10, 1994, p. 3.

, John Bryan Hopes for Perfect Handoff, Crains Chicago Business, September 22, 1997, p. 3.

, A Run in Sara Lees Stockings Unit, Crains Chicago Business, August 9, 1993, p. 1.

, Stale Goods? Sara Lee Seeks Recipe to Fire Up Sluggish Sales, Crains Chicago Business, July 24, 1989, p. 1.

Cummings, Nathan, Consolidated Foods: Blueprint for the Construction of a Diversified Company, New York: Newcomen Society in North America, 1965.

Curtis, Carol E., Nothing Beats a Great Pair of LEggs, Forbes, September 29, 1980, p. 72.

Designs on Europes Knickers: Sara Lee, Economist, November 14, 1992, p. 86.

Eig, Jonathan, Sara Lee Agrees to Acquire Earthgrains, Wall Street Journal, July 3, 2001, p. B5.

Feitelberg, Rosemary, The New Sara Lee: Hosiery Giant Sends Message of Change, Womens Wear Daily, September 22, 1997, p. 1.

Feitelberg, Rosemary, et al., Sara Lee to Sell Non-Core Units, Womens Wear Daily, May 31, 2000, p. 2.

Flores, Delia, and Steve Willey, Consolidated Foods Triumphs in Offer for Kiwi, Wall Street Journal, November 1, 1984.

Forster, Julie, Sara Lee: Changing the RecipeAgain, Business Week, September 10, 2001, pp. 125-26.

Gallagher, Patricia, Sara Lees Track Record Has a $732-Mil. Run in It, Crains Chicago Business, June 13, 1994.

Gallun, Alby, Mending Underwear Biz: Discounting Unravels Profits for Sara Lee, Crains Chicago Business, November 12, 2001, p. 4.

, Sara Lees Special Sweetener: Tax Breaks Key Ingredient in Profits, Crains Chicago Business, March 18, 2002, p. 1.

, Wary Shopper: Investors Wonder If Sara Lee CEO Has a Plan, Crains Chicago Business, May 21, 2001, p. 1.

Giges, Nancy, ConFoods Gets Deeper into Distribution, Advertising Age, March 29, 1982, pp. 4 + .

Gordon, Mitchell, Bakers Dozen? Thats Where Sara Lee Seems Headed with Yearly Profit Gains, Barrons, April 21, 1986, pp.47 + .

, Unbroken Stride: Consolidated Foods Appears Headed for Another Year of Record Net, Barrons, May 16, 1983, pp. 59 +.

Griffin, Dick, John Bryan Rewrites the Gospel According to Nate Cummings, Fortune, June 4, 1979, p. 100.

Heiman, Grover, A Sprawling Companys Organization Man, Nations Business, April 1983, pp. 48 + .

James, Frank E., Sara Lee to Buy Dutch Business, Sell Electrolux, Wall Street Journal, September 18, 1987.

A Leaner Consolidated Foods Rediscovers Marketing, Business Week, August 29, 1983, pp. 58 + .

Leonhardt, David, Sara Lee: Playing with the Recipe, Business Week, April 27, 1998, pp. 114, 116.

McEntee, Helene, John Bryan Leads a Leaner Sara Lee Corp., Chicago Sun-Times, August 11, 1985.

McGill, Douglas C, At Sara Lee, Its All in the Names, New York Times, June 19, 1989, p. Dl.

McGough, Robert, Icing on the Cake, Financial World, October 17, 1989, pp. 22-24.

Melcher, Richard A., Sara Lee Isnt Exactly Cooking, Business Week, January 24, 1994.

Morgello, Clem, John Bryan of Sara Lee Corp.: A Winning Global Strategy, Institutional Investor, May 1992, p. 17.

Our Corporate History, Chicago: Sara Lee Corporation, 1986.

Petterchak, Janice A., To Share: The Heritage, Legend, and Legacy of Nathan Cummings, Rochester, III: Legacy Press, 2000.

Rewick, C.J., Sara Lees New Recipe for a Post-Bryan Era, Crains Chicago Business, October 26, 1998, p. 1.

Rutberg, Sidney, Apparel Is the $3 Billion Frosting on Sara Lees Cake, Womens Wear Daily, October 4, 1989, p. 23.

Stylish Acquisition: Fast-Stepping Hosiery Unit Sets the Pace at Consolidated Foods, Barrons, September 20, 1982, pp. 48 + .

Themen, Lois, Sara Lee: No Fads, No Buyouts, Just Old-Fashioned Growth, Business Week, November 14, 1988, pp. 110+.

Waters, Jennifer, After Euphoria, Can Sara Lee Be Like Nike?, Crains Chicago Business, September 22, 1997, p. 3.

, Why Sara Lee Bagged Mark Cross, Crains Chicago Business, September 8, 1997, p. 3.

Weber, Joseph, No Cakewalk at Sara Lee, Business Week, June 12, 2000, p. 56.

Weiner, Steve, How Do You Say LEggs in French?, Forbes, November 27, 1989, p. 73.

, On the Road to Eastern Europe, Forbes, December 10, 1990, p. 193.

Zweig, Phillip L., Aris Doesnt Fit Sara Lee Like a Glove Anymore, Business Week, September 18, 1995.

update: David E. Salamie

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Sara Lee Corporation

Sara Lee Corporation

Three First National Plaza
Chicago, Illinois 60602-4260
U.S.A.
(312) 726-2600
Fax: (312) 726-3712

Public Company
Incorporated: 1941 as C.D. Kenny Company
Employees: 149,000
Sales: $17.72 billion (1995)
Stock Exchanges: New York Midwest Pacific London Amsterdam Paris Zurich Geneva Basel
SICs: 2011 Meat Packing Plants; 2013 Sausage & Other Prepared Meats; 2053 Frozen Baking Products, Except Bread; 2095 Roasted Coffee; 2251 Womens Full-Length & Knee-Length Hosiery; 2253 Knit Outerwear Mills; 2842 Specialty Cleaning, Polishing & Sanitation Preparations; 2844 Perfumes, Cosmetics & Other Toilet Preparations; 5142 Packaged Frozen Foods; 5147 Meats & Meat Products

Sara Lee Corporation is a leading global manufacturer and marketer of brand-name consumer packaged goods within four major business areas: packaged meats and bakery, coffee and grocery, household and personal care, and personal products. Within packaged meats and bakery, a predominantly U.S.-oriented operation, Sara Lee holds a leading position in the U.S. retail packaged meat market through such brands as Hillshire Farm, Ball Park, and Jimmy Dean; is number one in U.S. retail frozen baked goods (the flagship Sara Lee brand); and operates the third-largest full-line foodservice company in the country. The primarily European coffee and grocery operations are led by the Douwe Egberts coffee brand and Pickwick tea, and enjoy number one or number two positions in retail roasted coffee in several European countries. The household and personal care area includes shoe care and body care products and insecticides and is Sara Lees most global business. Active mainly in Europe and North America, Sara Lees personal products businesses include leading brands of hosiery, bras, panties, activewear, and underwear under such brands as Bali, Champion, Dim, Hanes, Hanes Her Way, Leggs, Playtex undergarments, and the Won-derbra. Although seemingly disparate, most Sara Lee products would be considered staples, helping insulate the company from the effects of economic cycles. Sara Lee has manufacturing operations in nearly 40 countries and sells its products in more than 140 countries.

Formally organized in 1939, what is now the Sara Lee Corporation spent the next three decades under the direction of founder Nathan Cummings. Although he retired from active management of the company in 1968, Cummings remained the largest stockholder until his death in 1985, when Sara Lee bought back 1.8 million common shares from his estate.

Born in Canada in 1896, Cummings began his career in his fathers shoe store. By 1917 he had built his own shoe manufacturing firm. Cummingss enterprise eventually expanded into a successful importer of general merchandise. This venture allowed him to purchase a small biscuit and candy company, which he later sold at a profit.

In 1939, at the age of 43, Cummings borrowed $5.2 million to buy the C.D. Kenny Company, a wholesale distributor of sugar, coffee, and tea established in 1870. The Baltimore-based company represented Cummingss first entry into U.S. markets, and he sought to increase the number of Kenny-label products.

Cummings broadened his geographic scope in 1942 with the purchase of Sprague, Warner & Company, a distributor of canned and packaged food nationwide. Under the established Richelieu label, sales came to $19 million that year, allowing Cummings to begin a significant expansion through acquisition, a strategy the company has consistently pursued.

After several smaller acquisitions, in 1945 Cummings acquired Reid, Murdoch and Company, the producer of the nationally recognized Monarch label. After this acquisition, the C.D. Kenny Company changed its name to the Consolidated Grocers Corporation, and in 1946 Consolidated made its first public stock offering. The Monarch purchase boosted sales to $123 million in 1946.

Smaller food companies struggled through a difficult period in the late 1950s and early 1960s as operational expenses and competition increasedcontinual development of new products and large promotional budgets were typically the only way to keep shelf space in supermarkets. But small companies offered their already-established brands to a large company like Consolidated, saving the cost of internal development. By 1970, Cummings had supervised the purchase of more than 90 companies by pursuing family-owned businesses who consented to mergers.

In 1951 Consolidated consisted of more than a dozen companies, and in 1953 sales passed $200 million. They did not remain that high for very long, however. Sales in 1954, the year Consolidated Grocers changed its name to Consolidated Foods, dropped to $133 million. Sales fell another $15 million the following year, when after-tax profits were only slightly above $1 million and earnings per common share fell almost 40 percent.

Cummings met these losses with further diversification. The Kitchens of Sara Lee, a five-year-old maker of frozen baked goods with annual sales of $9 million, was acquired in 1956 for 164,890 sharesnot Consolidateds biggest purchase to date, but eventually a significant one. A slightly larger purchase of 34 Piggly Wiggly supermarkets marked Consolidateds first venture into food retailing. An even larger purchase, of the Omaha Cold Store Company, demonstrated Consolidateds preference for distribution and marketing operations rather than direct-to-consumer sales.

Consolidated continued a rapid acquisition pace into the 1960s with Shasta beverages and the Eagle Supermarket chain in 1961. L.H. Parke Company, Michigan Fruit Canners, and Monarch Food Ltd. of Toronto together added $35 million in sales for 1962. The corporation first went international in 1960 by buying a controlling interest in a Venezuelan vinegar company; a second foreign investment came in 1962, with the purchase of Jonker Fris, a Dutch canner. Although growth was rapid, analysts considered Consolidated stock a risk since dividend increases depended on purchases.

During the 1960s recently acquired Booth Fisheries reported a 16 percent rise in sales volume for 1962, up to $56.6 million. By following the industry trend toward packaging seafood for the convenience market, Booth Fisheries fought off fish shortages and normally unstable prices, raising division earnings from $2.35 per share to $3.22.

In 1966 Consolidated agreed to a Federal Trade Commission (FTC) order to spin off its supermarket division within three years, principally its Piggly Wiggly and Eagle supermarket chains. This agreement came as a surprise to analysts, because the industry expected leniency from the FTC due to the high cost of small-scale food production and distribution. But Consolidated Foods President William Hewlett publicly welcomed the agreement, stating that Consolidated no longer wished to compete at the retail level with its other customers. And Consolidated still kept its convenience retail outlets such as Lawson Milk, purchased in 1960.

As Cummings prepared for retirement, Consolidated searched for a larger share of European and American markets. New production facilities were planned for Shasta and Sara Lee in 1964, tripling the latters output, and sales that year topped $600 million. In 1966, Consolidated made two more important food purchases: Kahns Meats and Idaho Frozen Foods.

Between 1964 and 1967, Consolidated made eight of its first nonfood acquisitions, including Oxford Chemical Corporation, a maker of cleaning products; Abbey Rents, a home furnishings company; Electrolux vacuum cleaners; and the Fuller Brush Company. Consolidated also entered the apparel industry when it purchased Gant shirts and several other clothing makers during this period. Within five years, nonfood businesses comprised 50 percent of the companys profits. William Howlett became Cummingss successor in 1968, but Cummings remained a director, and the largest shareholder, until his death. Howlett left two years later due to disagreements with the founding director. Despite the turbulence of the decade, sales tripled and after-tax earnings increased fivefold.

William A. Buzick Jr. became president in 1970, beginning a difficult decade for the corporation; by 1980, the selling price for a common share was almost 40 percent lower than 1970s purchase price. Although sales continued to rise, as the leader in the trend toward diversification, Consolidated soon discovered the drawbacks of the strategy as well. Consolidateds profits rose only 4 percent from 1972 to 1973the year sales hit $2 billioncompared to an industry average of 17 percent. Sales continued to rise in 1974, but earnings dropped for the first time in 19 years as nonfood business did poorly.

During Buzicks five-year reign, Consolidated sold many of its food distribution businesses and production facilities. Buzick also increased the companys commitment to nonfood products with the purchase of Max Klein, Inc., a Philadelphia-based clothing company and Erdal (later Intradal), a Dutch personal care products company.

Nonfood activity peaked in 1975 as durable goods provided almost two-thirds of corporate profits. The diversification was prompted in part by the companys belief that federal restraints on the food industry would continue. In addition, economic constraints made Consolidateds growth goals difficult to achieve as only a food company. Under President Richard Nixons economic-stabilization program of 1973, for instance, Sara Lee was allowed to raise prices on frozen baked goods only 6.35 percent; Consolidated had requested a 7.52 percent hike. Moving into nonfood businesses would make the corporation less dependent on federal decisions and less vulnerable to the antitrust suits that had impeded competitors.

Buzick left in 1975 and John H. Bryan became president. Bryans family-owned business, Bryan Brothers Packing, was a 1968 Consolidated purchase. Bryan quickly sold more than 50 companies, most of which were smaller acquisitions made in the early 1970s. Fuller Brush and four furniture companies were singled out as problem units and divested. Earnings recovered the following year to $77.5 million, and Consolidateds operating margin returned to 7.6 percent.

Bryan continued to value nonfood sales, however. For the next ten years, nonfood products continued to make up more than 50 percent of corporate income but only 30 percent of total sales. Purchases during the 1980s continued the trend toward solidifying durable goods production.

Bryans acquisition portfolio represented a more aggressive stance in all of its markets. Before the 1978 purchase of Douwe Egberts, a Dutch coffee, tea, and tobacco producer, only 11 percent of Consolidateds income came from abroad; by 1989 it made up nearly 30 percent. In 1979 Consolidated completed a hostile takeover of the Hanes Corporation, a family-owned undergarment manufacturer.

Despite difficultiespoor performance of some nonfood companies led to earnings losses in 1974 and 1975 Consolidateds performance excelled by the end of the 1970s. Between 1967 and 1973, sales doubled to $2 billion and total assets topped $1 billion. These figures allowed the company to set a goal of doubling sales volume by 1980; the actual amount achieved exceeded $5 billion.

Bryans initial management goals were to keep the company diversified and decentralized, while keeping the corporate office responsible for financial control and strategic planning. Acquisition targets would be brands with leading market shares in new areas and integrating acquisitionslarge companies with established brands in Consolidateds markets. Hillshire Farm meats and Chef Pierre pies fell into the latter category, and were purchased in the late 1970s, building on Consolidateds meat and pastry market shares.

In 1985 Consolidated announced that it would change its name to Sara Lee Corporation. The name was chosen because it was the corporations most prominent brand name, and as a corporate name would give the company higher visibility and make advertising efforts more cost effective.

The first of two major foreign acquisitions came in 1985 when Nicholas Kiwi Ltd.s foreign subsidiaries were purchased for $330 million, in addition to 14 percent of its Australian domestic operations. Kiwiseller of a variety of shoe care products, medicines, cleaners, and cosmeticscomplemented Intradal, Sara Lees Dutch subsidiary. Akzo, a Dutch conglomerate with annual sales of $720 million, was acquired in 1987 for approximately $600 million, the companys largest purchase ever. Another producer of household goods, Akzo was absorbed into Douwe Egberts and Kiwi. By mid-1987, just nine years since its first international venture, Sara Lee was among the largest U.S. multinationals, with foreign revenue reaching almost $2 billion, making up 24.1 percent of total sales, 26.8 percent of profits, and 40.5 percent of total corporate assets.

Although still very active in acquisitions, Bryan also drew praise for stressing internal product development. Return on total investment typically decreases in the wake of large purchases, but Bryan kept return on equity above 20 percent in nearly every year since 1985. This was especially unusual for a company whose growth was almost entirely through acquisition96 percent of Sara Lees 141 entries into new businesses were through acquisition between 1950 and 1986.

Bryan was responsible for easing the uncertainty of the 1970s, shifting the companys focus to the marketing of consumer products only. He also improved manufacturing efficiency and product development. In 1986 sales dropped from $8.1 billion to $7.9 billion, yet income increased $17 million. Domestic consumer and institutional food divisions reported the largest sales drop, as Shasta, Idaho Frozen Foods, and Union Sugar were divested and Popsicle was restructured and eventually divested. Bryan also introduced lower-priced items to complement the corporations premium Sara Lee and Hanes labels. Bryan hoped, with this tactic, to improve total sales volume as successfully as the meat division had done in the past. In 1989 the company began the divestiture of its food-service operations, then its poorest-performing division.

During the early 1990s Sara Lee continued to grow through acquisition and increased its market presence abroad. During the first three years of the decade, it spent more than $1.7 billion in adding a variety of properties to the Sara Lee stable, including Playtex undergarments; Brylcreem; Mark Cross leather goods; hosiery companies in France (Dim S.A.), Spain (Sans, S.A.), Italy (Filodoro) and the United Kingdom (Pretty Polly Limited); the consumer food group of BP Nutrition; and Smith-Kline Beechams European bath and body care business.

Perhaps most significant among these purchases was Playtex. Coupled with such existing holdings as Bali, the acquisition of Playtex gave Sara Lee a commanding presence in the intimate apparel market in the United States, with overall market share of more than 31 percent and market share in some niche areas surpassing 65 percent. Although some competitors expressed concerns about the monopolistic nature of the combination, they made little headway with the free marketers of the Bush administration.

Ironically, Sara Lees spending spree within another area hosieryquickly came back to haunt the company. A combination of several factors converged to lead to declining hosiery sales starting in late 1992. In the midst of a recession in Europe, the newly acquired hosiery units in France, Spain, and the United Kingdom experienced increasing competitive pressure. Sara Lee also erred in replacing the managers of the firms with U.S. personnel not as familiar with the local markets. Most importantly, both in Europe and the United States, the company failed to recognize quickly enough the trend toward more casual attire both at the office and for social events, and, therefore, the resultant decreased demand for formal hosiery. Since hosiery comprised 25 percent of overall apparel sales, the decrease in hosiery sales presented a significant challenge. In response, Sara Lee quickly moved to decrease hosiery capacity by closing two U.S. plants, cutting capacity at a third, and closing a plant in France. Sara Lees apparel division was also realigned into a more flattened organizational structure.

Leading the way in these efforts was newly appointed president Cornelius Boonstra. A 20-year Sara Lee veteran with a strong background in operations, Boonstra provoked some disenchantment with his aggressive cost-cutting measures, which included reducing staff in the Chicago headquarters by ten percent. Although praised by Wall Street for the cuts, several senior managers left Sara Lee soon after his appointment and continuing friction with other executives led to his resignation in early 1994 after only six months in the job. No one was immediately appointed to succeed him.

In another irony, in June 1994 Sara Lee announced a major restructuring of its European personal products operations, which included cuts much more severe than those imposed by Boonstra. The company took a $732 million charge mainly to reduce capacity in its hosiery operations. Several more plants were closed and more than 8,000 jobs were cut.

Rebounding from the difficult restructuring year of 1994, Sara Lee enjoyed record sales of $17.71 billion (a 14 percent increase over 1994) and record operating income of $1.6 billion in fiscal 1995, with 12 Sara Lee brands racking up sales in excess of $250 million. For the year, 40 percent of Sara Lees sales and 45 percent of its operating income were generated from its operations abroad.

Under Bryans leadership, Sara Lee had enjoyed tremendous growth fueled by aggressive and targeted acquisitions, which were integrated into a highly decentralized organizational structure. When faced with difficulties, the company was able to respond quickly enough to prevent lasting damage to the firms reputation or financial health. The potential for growth of this well-managed company into the next century seemed promising, and Bryan intended to base it on five strategies: building brands; lowering production costs and keeping them low; making further strategic and complementary acquisitions; investing in high-margin, value-added products; and increasing non-U.S. operations, particularly those in developing countries.

Principal Subsidiaries

Sara Lee Holdings (Australia); Canadelle, Inc. (Canada); Giltex Hosiery (Canada); Merrild Kaffe (Denmark); Dim S.A. (France); Sara Lee Personal Products Europe (France); Vatter (Germany); Sara Lee Corp.-Asia (Hong Kong); Compack Douwe Egberts RT (Hungary); Filodoro (Italy); Maglificio Bel-lia S.p.A. (Italy); Playtex - Europe (Italy); Nihon Sara Lee K.K. (Japan); Upxon, Inc. (Japan); Estelar SA de CV (Mexico); House of Fuller, S.A. de C.V. (Mexico); Kir Alimentos, S.A. de C.V. (Mexico; joint venture); Manufacturas Mallorca S.A. (Mexico); Rinbros, S.A. (Mexico); Sara Lee Knit Products-Mexico; Kortman Intradal (Netherlands); Sara Lee/DE (Netherlands); Sara Lee Processed Meats-Europe (Netherlands); Intercon Garments, Inc. (Philippines); Sara Lee/DA Asia (Singapore); Avroy Shlain Cosmetics (Pty.) Ltd. (South Africa); Kiwi Brands South Africa Playtex - South Africa; South African Hosiery Company Ltd.; Cruz Verde-Legrain (Spain); Sans, S.A. (Spain); Kitchens of Sara Lee - U.K.; Pretty Polly Limited (U.K.); Sara Lee Household & Personal Care-U.K.; Nuvo (Uruguay).

Principal Divisions

Adams-Millis; Aris Isotoner; Bali Company; Bessin; Bil Mar Foods; Bryan Foods; Champion Products; Coach; Douwe Egberts Coffee Systems Americas; Gallo/Galileo Salame; Hanes Hosiery; Hillshire Farm & Kahns; Hygrade Food Products; International Baking Co.; Jimmy Dean Foods; Jogbra, Inc.; King Gotten Foods; Kiwi Brands North America; Leggs Products; Mark Cross; Playtex Apparel; PYA/Monarch; Sara Lee Bakery North America; Sara Lee Bakery Worldwide; Sara Lee Direct; Sara Lee Hosiery; Sara Lee Intimates; Sara Lee Knit Products; Sara Lee Meats; Sara Lee Personal Products; Scotch Maid; Seitz Foods; Spring City Knitting; State Fair Foods; Superior Coffee and Foods; Sweet Sue Kitchens; Wolfermans, Inc.

Principal Operating Units

Sara Lee Packaged Meats and Bakery; Sara Lee Coffee and Grocery; Sara Lee Household and Personal Care; Sara Lee Personal Products.

Further Reading

Byrne, Harlan S., Sara Lee Corp., Barron s,October 12, 1992, p. 51.

Crown, Judith, He Didnt Do Things Like Sara Lee: Cost-Cutting, Style Led to Boonstras Quick Exit, Cretins Chicago Business,January 10, 1994, p. 3.

Designs on Europes Knickers: Sara Lee, Economist,November 14,1992, p. 86.

Gallagher, Patricia, Sara Lees Track Record Has a $732-Mil. Run in It, Crams Chicago Business,June 13, 1994.

Melcher, Richard A., Sara Lee Isnt Exactly Cooking, Business Week,January 24, 1994.

Morgello, Clem, John Bryan of Sara Lee Corp.: A Winning Global Strategy, Institutional Investor,May 1992, p. 17.

Our Corporate History,Chicago: Sara Lee Corporation, 1986.

Weiner, Steve, How Do You Say Leggs in French?, Forbes,November 27, 1989, p. 73.

Weiner, Steve, On the Road to Eastern Europe, Forbes,December 10, 1990, p. 193.

Zweig, Phillip L., Aris Doesnt Fit Sara Lee Like a Glove Anymore,Business Week,September 18, 1995.

updated by David E. Salamie

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Sara Lee Corporation

Sara Lee Corporation

Three First National Plaza
Chicago, Illinois 60602
U.S.A.
(312) 7262600

Public Company
Incorporated:
1941 as C.D. Kenny Company
Employees: 100,000 (1989)
Sales: $11.72 billion (1989)
Stock Index: New York Midwest Pacific London Amsterdam Zurich Geneva Basel

After a decade of restructuring, divestment, and acquisition, the Sara Lee Corporation has emerged as one of Americas largest multinational companies. Sara Lee has consolidated its businesses within four areas: U.S. consumer foods, international consumer foods, consumer personal products, and consumer household products.

Formally organized in 1939, what is now the Sara Lee Corporation spent the next three decades under the direction of founder Nathan Cummings. Although he retired from active management of the company in 1968, Cummings remained the largest stockholder until his death in 1985, when Sara Lee bought back 1.8 million common shares from his estate.

Born in Canada in 1896, Cummings began his career in his fathers shoe store. By 1917 he had built his own shoe-manufacturing firm. Cummingss enterprise eventually expanded into a successful importer of general merchandise. This venture allowed him to purchase a small biscuit and candy company, which he later sold at a profit.

in 1939, at the age of 43, Cummings borrowed $5.2 million to buy the C.D. Kenny Company, a wholesale distributor of sugar, coffee, and tea established in 1870. The Baltimore-based company represented Cummingss first entry into American markets, and he sought to increase the number of Kenny-label products.

Cummings broadened his geographic scope in 1942 with the purchase of Sprague, Warner & Company, a distributor of canned and packaged food nationwide. Under the established Richelieu label, sales came to $19 million that year, allowing Cummings to begin a significant expansion through acquisition, a strategy the company has consistently pursued.

After several smaller acquisitions, in 1945 Cummings acquired Reid, Murdoch and Company, the producer of the nationally recognized Monarch label. After this acquisition, the C.D. Kenny Company changed its name to the Consolidated Grocers Corporation, and in 1946 Consolidated made its first public stock offering. The Monarch purchase boosted sales to $123 million in 1946.

Smaller food companies struggled through a difficult period in the late 1950s and early 1960s as operational expenses and competition increasedcontinual development of new products and large promotional budgets were typically the only way to keep shelf space in supermarkets. But small companies offered their already-established brands to a large company like Consolidated, saving the cost of internal development. By 1970, Cummings had supervised the purchase of over 90 companies by pursuing family-owned businesses who consented to mergers.

In 1951 Consolidated consisted of over a dozen companies, and in 1953 sales passed $200 million. They did not remain that high for very long, however. Sales in 1954, the year Consolidated Grocers changed its name to Consolidated Foods, dropped to $133 million. Sales fell another $15 million the following year, when after-tax profits were only slightly over $1 million and earnings per common share fell almost 40%.

Cummings met these losses with further diversification. The Kitchens of Sara Lee, a five-year-old maker of frozen baked goods with annual sales of $9 million, was acquired in 1956 for 164,890 sharesnot Consolidateds biggest purchase to date, but eventually a significant one. A slightly larger purchase of 34 Piggly Wiggly supermarkets marked Consolidateds first venture into food retailing. An even larger purchase, of the Omaha Cold Store Company, demonstrated Consolidateds preference for distribution and marketing operations rather than direct-to-consumer sales.

Consolidated continued a rapid acquisition pace into the 1960s with Shasta beverages and the Eagle Supermarket chain in 1961. L.H. Parke Company, Michigan Fruit Canners, and Monarch Food Ltd. of Toronto together added $35 million in sales for 1962. The corporation first went international in 1960 by buying a controlling interest in a Venezuelan vinegar company; a second foreign investment came in 1962, with the purchase of Jonker Fris, a Dutch canner. Although growth was rapid, analysts considered Consolidated stock a risk since dividend increases depended on purchases.

During the 1960s recently acquired Booth Fisheries reported a 16% rise in sales volume for 1962, up to $56.6 million. By following the industry trend toward packaging seafood for the convenience market, Booth Fisheries fought off fish shortages and normally unstable prices, raising division earnings from $2.35 per share to $3.22.

In 1966 Consolidated agreed to a Federal Trade Commission (FTC) order to spin off its supermarket division within three years, principally its Piggly Wiggly and Eagle supermarket chains. This agreement came as a surprise to analysts, because the industry expected leniency from the FTC due to the high cost of small-scale food production and distribution. But Consolidated Foods President William Hewlett publicly welcomed the agreement, stating that Consolidated no longer wished to compete at the retail level with its other customers. And Consolidated still kept its convenience retail outlets like Lawson Milk, purchased in 1960.

As Cummings prepared for retirement, Consolidated searched for a larger share of European and American markets. New production facilities were planned for Shasta and Sara Lee in 1964, tripling the latters output, and sales that year topped $600 million. In 1966, Consolidated made two more important food purchases: Kahns Meats and Idaho Frozen Foods.

Between 1964 and 1967, Consolidated made eight of its first nonfood acquisitions, including Oxford Chemical Corporation, a maker of cleaning products; Abbey Rents, a home furnishings company; Electrolux vacuum cleaners; and the Fuller Brush Company. Consolidated also entered the apparel industry when it purchased Gant shirts and several other clothing makers during this period. Within five years, nonfood businesses comprised 50% of the companys profits. William Hewlett became Cummingss successor in 1968, but Cummings remained a director, and the largest shareholder, until his death. Howlett left two years later due to disagreements with the founding director. Despite the turbulence of the decade, sales tripled and after-tax earnings increased fivefold.

William A. Buzick Jr. became president in 1970, beginning a difficult decade for the corporation: by 1980, the selling price for a common share was almost 40% lower than 1970s purchase price. Although sales continued to rise, as the leader in the trend toward diversification, Consolidated soon discovered the drawbacks of the strategy as well. Consolidateds profits rose only 4% from 1972 to 1973the year sales hit $2 billioncompared to an industry average of 17%. Sales continued to rise in 1974, but earnings dropped for the first time in 19 years as nonfood business did poorly.

During Buzicks five-year reign, Consolidated sold many of its food-distribution businesses and production facilities. Buzick also increased the companys commitment to nonfood products with the purchase of Max Klein, Inc., a Philadelphia-based clothing company and Erdal (later Intradal), a Dutch personal-care products company.

Nonfood activity peaked in 1975 as durable goods provided almost two-thirds of corporate profits. The diversification was prompted in part by the companys belief that federal restraints on the food industry would continue. In addition, economic constraints made Consolidateds growth goals difficult to achieve as only a food company. Under President Richard Nixons economic-stabilization program of 1973, for instance, Sara Lee was allowed to raise prices on frozen baked goods only 6.35%; Consolidated had requested a 7.52% hike. Moving into nonfood businesses would make the corporation less dependent on federal decisions and less vulnerable to the antitrust suits that had impeded competitors.

Buzick left in 1975 and John H. Bryan became president. Bryans family-owned business, Bryan Brothers Packing, was a 1968 Consolidated purchase. Bryan quickly sold more than 50 companies, most of which were smaller acquisitions made in the early 1970s. Fuller Brush and four furniture companies were singled out as problem units and divested. Earnings recovered the following year to $77.5 million, and Consolidateds operating margin returned to 7.6%.

Bryan continued to value nonfood sales, however. For the next ten years, nonfood products continued to make up more than 50% of corporate income but only 30% of total sales. Purchases during the 1980s continued the trend toward solidifying durable-goods production.

Bryans acquisition portfolio represented a more aggressive stance in all of its markets. Before the 1978 purchase of Douwe Egberts, a Dutch coffee, tea, and tobacco producer, only 11% of Consolidateds income came from abroad; today it makes up nearly 30%. In 1979 Consolidated completed a hostile takeover of the Hanes Corporation, a family-owned undergarment manufacturer.

Despite difficultiespoor performance of some nonfood companies led to earnings losses in 1974 and 1975Consolidateds performance excelled by the end of the 1970s. Between 1967 and 1973, sales doubled to $2 billion and total assets topped $1 billion. These figures allowed the company to set a goal of doubling sales volume by 1980; the actual amount achieved exceeded $5 billion.

Bryans initial management goals were to keep the company diversified and decentralized, while keeping the corporate office responsible for financial control and strategic planning. Acquisition targets would be brands with leading market shares in new areas and integrating acquisitionslarge companies with established brands in Consolidateds markets. Hillshire Farm meats and Chef Pierre pies fell into the latter category, and were purchased in the late 1970s, building on Consolidateds meat and pastry market shares.

The first of two major foreign acquisitions came in 1985 when Nicholas Kiwi Ltd.s foreign subsidiaries were purchased for $330 million, in addition to 14% of its Australian domestic operations. Kiwi sells a variety of shoe-care products, medicines, cleaners, and cosmetics, and complemented Intradal, Consolidateds Dutch subsidiary. Akzo, a Dutch conglomerate with annual sales of $720 million, was acquired in 1987 for approximately $600 million, the companys largest purchase ever. Another producer of household goods, Akzo was absorbed into Douwe Egberts and Kiwi. By mid-1987, just nine years since its first international venture, Sara Lee was among the largest U.S. multinationals, with foreign revenue reaching almost $2 billion, making up 24.1% of total sales, 26.8% of profit, and 40.5% of total corporate assets.

Although still very active in acquisitions, Bryan also drew praise for stressing internal product development. Return on total investment typically decreases in the wake of large purchases, but Bryan has kept return on equity over 20% since 1985. This is especially unusual for a company whose growth is almost entirely through acquisition96% of Consolidateds 141 entries into new businesses were through acquisition between 1950 and 1986.

Bryan has been responsible for easing uncertainty of the 1970s, shifting the companys focus to the marketing of consumer products only. He has also improved manufacturing efficiency and product development. In 1986 sales dropped from $8.1 billion to $7.9 billion, yet income increased $17 million. Domestic consumer and institutional food divisions reported the largest sales drop, as Shasta, Idaho Frozen Foods, and Union Sugar were divested and Popsicle was restructured. Bryan has also introduced lower-priced items to complement the corporations premium Sara Lee and Hanes labels. Bryan hopes, with this tactic, to improve total sales volume as successfully as the meat division has done in the past.

In 1985 Consolidated announced that it would change its name to Sara Lee Corporation. The name was chosen because it was the corporations most prominent brand name, and as a corporate name would give the company higher visibility and make advertising efforts more cost effective.

Instead of paring back down to a core food business in the 1980s like other American food companies, Sara Lee has continued acquisitions of nonfood producers. The company also used the strong dollar in the mid-1980s to increase it market presence abroad. Nearly one-third of the companys employees and operating profit and more than 40% of assets are from foreign concerns. Bryan believes that nonfood branded products and overseas markets are key to long-term earnings. Although the performance of traditional food products has been improving, the nonfood sectors have historically provided more earnings for Sara Lee relative to sales.

In 1989 the company began the divestiture of its food-service operations, then its poorest-performing division. Although philosophically in favor of future acquisitions, the relatively young Bryan will stress internal development of facilities and products and increasing the companys shares in existing markets. Sara Lee entered the 1990s with the enthusiastic endorsement of stock analysts because of its 1960s-style balance of food and durable-goods operations and a product line which consumers demand in recession as well as in boom times.

Principal Subsidiaries

Aris Isotoner, Inc.; Bali Foundations, Inc.; Bryan Foods, Inc.; Canadelle Intimate Fashions, Inc.; Coach Leatherware Co., Inc.; Green Hill Inc.; Hanes Menswear, Inc.; The Jimmy Dean Meat Co., Inc.; Sara Lee Bakery Co.; Kiwi Brands Inc.; Leggs Brands, Inc.; Ozark Salad Co.; Peck Foods Corp.; PYA/Monarch, Inc.; Galileo-Capri Salame, Inc.; Bil Mar Foods Inc.; Schloss & Kahn; Sara Lee International Corp.; Seitz Foods, Inc.; Standard Meat Co.; Superior Coffee & Foods, Inc.; Intradal Nederland B.V.; Nicholas Kiwi Australia Ltd. (Australia); Dim S.A. (France); Douwe Egberts (Netherlands); Champion Products; Hygrade Foods; Van Nelle (Netherlands); Hillshire Farm.

Further Reading

Our Corporate History, Chicago, Sara Lee Corporation, 1986.

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Sara Lee Corporation

Sara Lee Corporation

founded: 1939



Contact Information:

headquarters: 3 1st national plz.
chicago, il 60602-4260 phone: (312)726-2600 fax: (312)726-3712 toll free: (800)654-sara url: http://www.saralee.com

OVERVIEW

Sara Lee is a leader in four industry segments, including packaged meats and bakery products; coffee and grocery; household and personal care products; and personal products. Its best-known product line, Sara Lee frozen bakery goods, represents just a small portion of the company's offerings. Other food products include packaged and processed meats, coffee, and tea. Half of the company's sales are from intimate apparel, hosiery, knit clothing and accessories, and household and personal care products.

During its almost 60 years of existence, Sara Lee has had several name changes and transformed from a small coffee, tea, and sugar company in Baltimore to today's huge multinational corporation, with operations in 40 countries. Much of this growth can be traced to a concentrated effort to develop new product lines and acquire companies both inside and outside of the United States.

Until recently, Sara Lee manufactured almost all of its products internally. In late 1997 the company began selling off many of its manufacturing plants and farming out the manufacturing of some of its products to outside suppliers. The move allows the company to concentrate on the marketing of its products.




COMPANY FINANCES

Sara Lee sells thousands of products worldwide. Of this enormous product line, 31 brands have achieved the status of "megabrands," so-called because their sales exceed $100 million per year.

In fiscal 1998, which ended June 30, 1998, Sara Lee posted net earnings of $523 million on sales of $20.01 billion, compared with fiscal 1997's net of $1.01 billion on sales of $19.73 billion. In 1996 the company reported net income of $916 million on sales of $18.62 billion. In fiscal 1995 Sara Lee had a net income of $804 million on revenue of $17.72 billion, compared with 1994's earnings of $199 million on sales of $15.54 billion.

For fiscal 1997 the Packaged Meats and Bakery division reported $7.61 billion in sales, while the Personal Products division's sales totaled $7.48 billion. Sales of the Coffee and Grocery and Household and Body Care divisions totaled $2.81 billion and $1.84 billion, respectively.

International sales accounted for 42 percent of total company sales and 47 percent of net earnings in fiscal 1997. U.S. sales in fiscal 1997 totaled $11.51 billion, with international sales reported at $8.25 billion. In fiscal 1996 the figures were $11.3 billion and $7.4 billion, respectively.

During a 52-week period during 1997 and 1998, Sara Lee's stock traded between a high of $63 and a low of $39. The company increased dividends by 10.8 percent in 1997, from $ .74 per share in 1996 to $ .82 per share in 1997.



ANALYSTS' OPINIONS

With economic expansion continuing from 1992 into the late 1990s, economists, business executives, and consumers alike predicted in several surveys that the economy would continue to be healthy and grow in the foreseeable future. One exception was the apparel industry. The Labor Department's 1996 figures showed that the apparel industry in the United States experienced greater job loss than any other private-sector business. The overall number of jobs in apparel manufacturing fell 43 percent between 1973 (the peak employment year) and 1996, with 61,000 workers losing their jobs in 1996 alone. The consensus of many experts was that foreign competition and changing demands for products would not permit a reversal of this reduction in the U.S. work force.

Following the lead of other companies such as Nike and Coca-Cola, Sara Lee decided to sell off its manufacturing plants in 1997. The company reasoned that because advanced technology can assure uniform quality of outsourced products, it can focus on brand visibility and quality in the minds of consumers. While most of Wall Street responded enthusiastically, some analysts advised caution. For example, in an earlier experiment, Sara Lee tried this with its Aris Isotoner gloves division. At that time, the company felt it could achieve even greater growth if it sold its one manufacturing plant. However, the company's factory in the Philippines boasted the lowest labor costs in the industry and the highest quality output. The new supplier cost up to 20 percent more, output slowed dramatically, and the quality of the gloves dropped. Orders weren't getting filled quickly enough, and sales dropped from $220 million in 1993 to $110 million in 1997. Many analysts felt that a company with good potential had been ruined by this experiment with outsourcing. Sara Lee finally sold the division in June 1997.

Another problem with the divestiture of its manufacturing operations, according to some analysts, is confusion in the marketplace. As suppliers make goods for several companies, a product with one brand name may be made in the same factory as a rival brand. The danger is the higher quality of private-label brands. Private-label brands are brands produced by a third party for sale by supermarkets and general retailers. Some analysts warn that such stores are rapidly shedding their reputation for poor-quality house brands, and that trend could spell trouble for companies such as Sara Lee.

FAST FACTS: About Sara Lee Corporation


Ownership: Sara Lee is a publicly owned company traded on the New York Stock Exchange.

Ticker symbol: SLE

Officers: John H. Bryan, Chmn. & CEO, 61, 1997 base salary $2,169,668; C. Steven McMillian, Pres. & COO, 51, 1997 base salary $1,279,062; Judith A. Sprieser, Sr. VP & CFO, 44; George W. Bryan, Sr. VP & CEO, Sara Lee Meats

Employees: 141,000 (1997)

Principal Subsidiary Companies: Sara Lee Corporation's subsidiaries and divisions include: Playtex Apparel; Coach; Hanes Hosiery; Ball Park; Hillshire Farm; Jimmy Dean; Kahn's; Kiwi Brands; L'eggs Products; and Sara Lee/DE (Netherlands).

Chief Competitors: Sara Lee competes against a wide variety of companies because of its diverse holdings. Some of its major competitors include: H.J. Heinz Co.; Kellogg Co.; General Mills, Inc.; and Fruit of the Loom.




HISTORY

Sara Lee Corporation was founded in 1939 when Nathan Cummings, who was born in Canada and had worked in his father's shoe store, borrowed the funds to buy C.D. Kenny Company, a Baltimore wholesaler of coffee, tea, and sugar. The company's practice of expanding through acquisition of other companies began in 1942 with the purchase of Sprague, Warner & Company, a food canning and packaging company. By 1956 the company had been renamed Consolidated Grocers Corporation, and then Consolidated Foods. In that same year, after a drastic drop in sales for the two preceding years, Cummings purchased the five-year-old Kitchens of Sara Lee (named after the daughter of the owner, Charles Lubin), a Chicago bakery that became well-known for its Sara Lee cheesecake. Because its baked goods remained the company's most well-known products, Consolidated Foods was renamed Sara Lee Corporation in 1985.

Succeeding years saw expansion into new product lines, including women's intimate apparel, shoe care products, coffee and tea, household products, food services, and others. Much of this expansion resulted from the aggressive acquisition of companies such as Hanes Corporation, Jimmy Dean Meat Company, Playtex Apparel, and Champion Products. Beginning in 1960 the company launched its expansion into international markets. By the late 1990s, Sara Lee had grown into a major multinational corporation operating in 40 countries and selling to more than 140.



STRATEGY

Throughout its history Sara Lee has pursued a strategy of acquisition, expansion into new markets, and introduction of new products. In the latter half of the 1990s, the company continued to implement a worldwide restructuring program begun in 1994, in which almost 100 plants were closed and almost 10,000 employees laid off. Sara Lee acquired foreign companies such as Aoste, a leading French meat processing company. As a result, Sara Lee's 1997 net income rose 10.2 percent to $1.01 billion from $916 million in fiscal 1996.

Following a strategy used successfully by other companies, Sara Lee announced in September 1997 that it would sell its manufacturing operations in both textiles and food. In the future, the company will buy finished products from suppliers, allowing its corporate strategists to concentrate on marketing. The divestiture is expected to cost $1.6 billion, but the company expects to rebound as it concentrates on its most profitable divisions.

In early 1998 Sara Lee revamped some product lines and targeted new markets. Most of these changes occurred in the apparel lines. By responding to consumer preferences, the company hopes to post higher sales.



INFLUENCES

When a federal economic stabilization program was instituted in 1973 and food product prices were regulated, Sara Lee already had expanded into other product areas and continued to do so, assuming correctly that diversification would leave the company less vulnerable to federal regulations and economic changes. Similarly, Sara Lee foresaw the need to tackle foreign markets long before many other American companies did. Its initial foreign acquisitions in the early 1960s grew into highly profitable foreign divisions and subsidiaries in the 1990s.

CHRONOLOGY: Key Dates for Sara Lee Corporation


1939:

Nathan Cummings buys C.D. Kenny Company

1942:

Cummings purchases Sprague, Warner & Co., and changes the company name to Sprague Warner-Kenny

1946:

Goes public

1954:

Stockholders change the name to Consolidated Foods Corporation

1956:

Acquires Kitchens of Sara Lee and 34 Piggly Wiggly supermarkets

1966:

Ventures outside of food by acquiring Oxford Chemical Company

1968:

Electrolux, Gant and Country Set are acquired

1969:

Aris Isotoner is acquired

1979:

Acquires Hanes

1980:

Sales reach $5 billion for the first time

1984:

Acquires Jimmy Dean Meats

1985:

Consolidated Foods becomes Sara Lee Corporation

1989:

Acquires Hygrade Food Products

1991:

Acquires Playtex Apparel

1993:

SmithKline Beecham is acquired

1997:

Sara Lee announces plans to sell its manufacturing operations in textiles and food to concentrate on marketing




The one notable instance in which Sara Lee did not accurately anticipate market trends was in the U.S. and European hosiery market. The combination of a European recession in the early 1990s, managers unfamiliar with local markets, and the trend toward less rigid work and leisure clothing ("Casual Fridays," for instance) forced Sara Lee to reorganize its hosiery operations, close some plants, and lay off thousands of workers between 1994 and 1996.




CURRENT TRENDS

Observing that Americans were growing more health conscious, Sara Lee developed lines of reduced-fat and no-fat products. The company is continuing to develop new products in this sector, including an all-white meat turkey frank introduced in 1998. Americans also always seem to be short on time, so Sara Lee introduced frozen meals that heat quickly and have a high-quality taste.

While undergarments don't necessarily follow trends, Sara Lee reacted to some notable trends. The company redesigned packaging in 1998 for the Hanes Her Way underwear for the 8- to 12-year-old market. Gone are the older models with the sexy look and also gone are the baby colors of pale blue and pink. Now the package sports teals and plums—trendy but not likely to be dated in a year. A sports bra was introduced for girls, responding to the fact that more girls are playing sports.

Sara Lee is turning to ethnic groups for increased sales and market share. In 1998 the company was expected to advertise heavily in African-American targeted magazines, promoting Silken Mist as the pantyhose of choice for African-American women. Company research indicates black women wear pantyhose at twice the rate of other customers.




PRODUCTS

In 1996 Sara Lee continued to expand its product line, particularly its food products. Sara Lee Bakery maintained its position as the top frozen baked goods producer in the United States, United Kingdom, and Australia. Because that market was weakening, it also expanded its line of fresh baked goods. New reduced-fat and no-fat versions of Sara Lee "staple foods" appeared—including the popular cheesecake. New coffee and tea products were introduced in Europe, such as Douwe Egbert Iced Coffee. New styles also were created for existing apparel lines, including Playtex and Wonderbra.

In 1998 new products continued to roll off the line. Hanes introduced BabyWear to go with its underwear line, and the food division presented health-conscious, time-starved consumers with Fat-Free White Turkey Ball Park Franks and Quick Fix Gourmet Meals.

CORPORATE CITIZENSHIP

Sara Lee feels it has a stake in society in general and formed Sara Lee Foundation to oversee its philanthropic efforts. Company policy is to donate at least 2 percent of its pre-tax profits to nonprofit organizations. These donations are in the form of both cash and products. In a 10-year span the company gave almost $200 million back to the community, with the 1997 figure being more than $34 million. Sara Lee's nonprofit donations are concentrated in five areas: culture, women's concerns, fighting hunger, local communities, and diversity.



GLOBAL PRESENCE

Sara Lee maintains a corporate presence in 40 countries and sells products in about 140 countries. More than 40 percent of the company's sales and nearly 50 percent of its profits are generated from its operations abroad.

The company traditionally has engaged in aggressive and frequent acquisitions, including international acquisitions over the past four decades. It also has large subsidiaries in many other countries, such as Sara Lee/DE in the Netherlands. The company claims to be the largest processed meats producer in the world, one of the four top coffee roasters, and the leader in the hosiery market in North America, western Europe, Australia, New Zealand, and South Africa.

The first international investment was made in 1960, when the company (then known as Consolidated Foods) bought the controlling interest in a Venezuelan vinegar company. Between 1978 and 1989, such major companies as Douwe Egberts (a Dutch coffee company), the foreign subsidiaries of Nicholas Kiwi Ltd. (an Australian shoe care company), and Akzo (a Dutch household goods producer) were acquired.

A European recession in the early 1990s and a decline in the hosiery market in both Europe and the United States damaged Sara Lee's international operations somewhat. The company continued to make international acquisitions in 1995 and 1996 though, including Nuvo (a cosmetics and women's apparel company in Uruguay) and Aoste (a French processed meat company).



EMPLOYMENT

Sara Lee has been ranked as one of the 100 best companies for working mothers by Women's Wire, based on the number of women holding professional and executive positions and on employee support services such as child care facilities. Sara Lee is one of the few U.S. corporations that looks at efforts made to advance women in evaluating its executives. Women make up 60 percent of Sara Lee's employees, and one-fourth of them are managers or officials. The company also is proud of its diversity, boasting that a third of its work force is made up of minorities, with 14 percent of them in managerial or official positions.




SOURCES OF INFORMATION

Bibliography

"100 best companies for working moms." women's wire work, 1997.

"61,000 jobs lost in 1996 in apparel industry employment." women's wear daily, 13 january 1997.

dimatteo, larry a. "trade dress infringement circa 1996." academy of marketing science, summer 1997.

ebenkamp, becky. "l'eggs goes multicultural in spring." brandweek, 16 february 1998.

———. "sara lee promos, new packs aim to ease hosiery shopping experience." brandweek, 26 january 1998.

———. "sara lee repackages youthful underwear to better draw juniors." brandweek, 5 january 1998.

minter, stephen g. "the magic of safety." occupational hazards, january 1998.

morgenson, gretchen. "been there, tried that." forbes, 20 october 1997.

neuborne, ellen. "naacp honors procter & gamble, sara lee." usa today, 18 november 1996.

"pig pin mania goes hog wild at the olympics." pr newswire, 2 august 1996.

rotenier, nancy. "let them eat cheesecake." forbes, 4 november 1996.

"sara lee corp." moody's industrial manual, 1996.

"sara lee corporation." hoover's online, march 1998. available at http://www.hoovers.com.

"sara lee corporation." international directory of company histories, vol. 15. detroit, mi: st. james press, 1996.

"sara lee corporation 10-k/405 filing," 19 february 1997. available at http://www.sec.gov.

sara lee corporation home page, 15 may 1998. available at http://www.saralee.com.

schlesinger, jacob m. "business cycle of booms, busts tamed, experts say." the denver post, 19 november 1996.

"separate and lift." economist newspaper, 20 september 1997.

sirard, jack. "investors like sara lee—a lot." sacramento bee, 14 november 1996.


For an annual report:

telephone: (800)654-sara or write: sara lee corporation, investor relations, corporate affairs dept., 3 1st national plz., chicago, il 60602-4260


For additional industry research:

investigate companies by their standard industrial classification codes, also known as sics. sara lee's primary sics are:

2011 meat packing plants

2013 sausages and other prepared meats

2053 frozen bakery products, except bread

2095 roasted coffee

2251 women's full-length and knee-length hosiery

2253 knit outerwear mills

2842 specialty cleaning, polishing, and sanitation preparations

2844 perfumes, cosmetics and other toilet preparations

5142 packaged frozen foods

5147 meats and meat products

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