Sara Lee: Strong growth in Q1/2009 driven by fresh bakery

Downers Grove / IL. (slc) Sara Lee Corporation reported net sales for the first quarter of fiscal 2009, ending September 27, 2008, of 3,3 billion USD, a 9,6 percent increase over the comparable period last year. The strong overall net sales growth was primarily driven by price increases to help offset higher input costs, favorable foreign currency exchange rates and strong unit volumes in the North American retail and fresh bakery segments and in international household and body care. The company´s adjusted net sales – which exclude acquisitions / divestitures and present fiscal 2008 net sales at fiscal 2009 foreign currency exchange rates – increased 5,9 percent in the first quarter of fiscal 2009 with growth in five of the six business segments. The complete press release about Sara Lee´s Q1/2009 is available here (PDF | 16 pages | 164 KB).

North American Fresh Bakery

• Net sales increased 17,1 percent to 571 million USD in the first quarter of fiscal 2009, primarily driven by higher prices to offset increased input costs and by unit volume growth. Adjusted net sales also rose 17,l1 percent.
• Operating segment income was 19 million USD in the first quarter, compared to 14 million USD in the year-ago period. The improvement was primarily driven by price increases and strong unit volumes and partially offset by an unfavorable sales mix and higher SG+A costs. Adjusted operating segment income was 19 million USD, compared to 14 million USD in the prior year.

Unit volumes increased 6,6 percent in the first quarter, driven by volume growth for branded and private label fresh bakery products. The Sara Lee brand improved on its position as the No. 1 fresh bread brand in America with an increase of 0,6 percentage points to achieve an 8,8 percent market share, according to IRI data, twelve weeks ending September 21, 2008. At the end of the first quarter, fresh bakery launched its new marketing campaign for Sara Lee Soft + Smooth breads built around the immensely popular «High School Musical 3: Senior Year» movie. The campaign is designed to reach the important six to 14 year-old target audience for the Soft + Smooth breads and their families. In addition to a TV commercial featuring members of the HSM 3 cast, the multi-media campaign includes on-pack and in-store promotions, premiere events, a micro-site and video contest.

International Bakery

• Net sales increased 4,0 percent to 229 million USD in the first quarter of fiscal 2009, primarily driven by price increases to cover higher input costs and favorable foreign currency exchange rates. This increase was partially offset by significantly lower unit volumes and a sales mix shift into private label bread in Spain. Adjusted net sales decreased 3,5 percent.
• The segment reported operating segment income of 15 million USD in the first quarter, compared to 13 million USD in the year-ago period, with the increase primarily driven by higher prices and lower SG+A costs, partially offset by lower unit volumes and higher commodity costs. Adjusted operating segment income was 15 million USD, compared to 18 million USD in the prior-year quarter.

Unit volumes decreased 11,5 percent in the first quarter, resulting from weak unit volumes in Spain and France due to economic and competitive pressures, and lower unit volumes in Australia mainly due to the planned exit of certain product lines. Capitalizing on the health and wellness trend, Bimbo re-launched its mainstream white breads – now made with olive oil – in the first quarter. The product line received the endorsement of Spain´s leading foundation for heart care that recognizes food products considered to be healthy under its strict criteria (source).

Info: The complete press release about Sara Lee´s Q1/2009 is available here.