Sara Lee to sell European apparel business, focus on food

By Lorraine Heller

- Last updated on GMT

Related tags: Sara lee, Sales, Chief executive officer

Leading US bakery and international consumer goods manufacturer
Sara Lee has announced that it has entered negotiations regarding
the sale of its European branded apparel business. The move forms
part of the company's bid to redefine its over-stretched product
portfolio and turn around its financial fortunes.

The division, which had total sales of nearly $1.2bn in the financial year of 2005, includes branded businesses in France, Germany, Italy, Spain, the UK and Eastern Europe. The move is part of a company overhaul announced in February that will see it sell off businesses that currently account for around 40 per cent of total earnings. "The intended sale of the branded apparel business in Europe is an important step towards simplifying our portfolio and focusing on growing our core food, beverage and household and body care businesses," said Brenda Barnes, chief executive officer of Sara Lee. "It is our hope that the discussions between parties, further due diligence activities, as well as information sharing and consultation with appropriate employee representatives can be completed over the next few weeks," a Sara Lee spokesperson told Throughout the 1980s and 1990s the company diversified widely, resulting in a business portfolio that strayed a long way from its core cake-making activity. As well as clothes and underwear, cosmetics, toiletries, shoe polish and air freshener products have resulted in operations that many industry experts say provide no or very little room for all-important synergies. The transformation, a five-year plan due to continue to 2010, is "designed to dramatically improve the company's performance and better position Sara Lee for long-term growth." As well as the sale of the European apparel business, the plan includes the divestiture of the company's international cosmetics business, its European packaged meat business and its US coffee business, all of which represent a combined $8.2bn in sales. The company said it intends to use the proceeds generated from these dispositions to fund investment in its growth businesses and strengthen its balance sheet. In August Sara Lee reported an increase in operating profits at its bakery division by 36 per cent over 2005, boosted by major cost-cutting. Net bakery sales for the period fell 3.5 per cent to $3.3bn, compared to last year's $3.4bn. The company aims to improve operational efficiency and reduce debt by at least $1.5bn in the next two years. It has already reduced marketing spending for the bakery division by 17 per cent. External links to companies or organisations mentioned in thisstory: Sara Lee

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