Sara Lee's Price Hikes Impact Latest-Quarter Results
Sara Lee Corp.'s 10.5% higher suggested retail prices versus the same year-ago period caused food retailers to cut back orders for the company's products, contributing to a 6.6% decline in the company's sales volume in its just-reported fiscal Q4, reports The Wall Street Journal .While the price hikes drove higher net sales for Sara Lee despite the volume declines (net sales rose 9% during the quarter), the company's current fiscal Q4 profits declined to $111 million, or 19 cents per share, versus $187 million/28 cens per share in the comparable period last fiscal.
Analysts attributed the impact both to the magnitude of the price hikes and the nature of Sara Lee products' categories.
"The supermarket is telling you that these price increases are probably too aggressive," D.A. Davidson & Co. analyst Timothy Ramey told WSJ . In Sara Lee's categories, such as deli meat, "people tend to consider price, not brand," added Morningstar analyst Erin Lash. Sara Lee Corp. CEO Marcel Smits said that in most cases, the company was the first within its categories to raise prices in response to rising input/commodities costs, creating a timing disadvantage with retailers concerned about consumers' reaction to price hikes and with consumers themselves. "We are generally ahead of the curve [with raising prices] and that means we'll have some volume risk," Smits said, adding: "We are not serving the long-term future of the business if we just let our margins erode, and therefore our ability to innovate and support our innovations.
Sara Lee Corporation - News
Sara Lee Corp.'s 10.5% higher suggested retail prices versus the same year-ago period caused food retailers to cut back orders for the company's products, contributing to a 6.6% decline in the company's sales volume
Among the companies whose shares are actively trading in the session are Cisco Systems Inc. (CSCO), AOL Inc. (AOL) and Sara Lee Corp. (SLE). Cisco's ($16.02, +$2.29, +16.68%) outlook for its fiscal first quarter was lower than analyst expectations,
On 9 August, the company announced that it had hammered out an agreement with Ralcorp to sell the concern for approximately $545 million. According to Marcel Smits, chief executive officer of Sara Lee Corp, the sale “is another step forward for Sara
Sara Lee Corporation (SLE), the bakery, beverage and household products reported fourth quarter net sales rose 9% to $2.3 billion from $2.1 billion in the same quarter last year. Net income in the quarter fell to $111 million or 19 cents per diluted
By AP , 08.11.11, 02:42 PM EDT _ Sara Lee Corp. said its fiscal fourth-quarter profit fell 41 percent as it continued to sell-off businesses even as revenue rose on strong results from its North American segments and international beverages unit.
Earnings Preview: Sara Lee Corp. - Zacks.com
Analyst Report ), one of the world’s leaders in manufacturing and marketing of a range of branded packaged meat, bakery, and beverage products, is scheduled to report its fourth-quarter 2011 financial results on Thursday, August 11, 2011.
The current Zacks Consensus Estimate for the quarter is pegged at 20 cents a share. The Zacks Consensus Estimate projects revenues to be $2,224 million for the quarter.
Third Quarter 2011 Recap
Sara Lee, which faces stiff competition from Kraft Foods Inc. ( KFT Analyst Report ), posted strong operating income growth for the third quarter of fiscal 2011, driven by significant improvement in operating segment income across the company, particularly in the North American Retail and International Beverage business segments and lower corporate expenses.
Adjusted earnings for the quarter were 30 cents a share compared to 29 cents during the same period of fiscal 2010. Earnings were well above the Zacks Consensus Estimate of 25 cents.
Net sales for the quarter increased 6.8% year over year to $2.2 billion, driven by 6.1% price increase and 1.3% favorable mix. This was partially offset by 3.3% decline in unit volume.
Management Guidance
The company updated the fiscal 2012 earnings per diluted share on a GAAP basis to a range of 67 cents to 71 cents. Further, management expects the pro forma earnings per share to be within 79 cents to 83 cents per share. The current Zacks Consensus Estimate for fiscal 2011 is 82 cents.
The company expects net sales to be within $8.9 to $9.0 billion range.
Fourth-Quarter 2011 Zacks Consensus
Earnings estimates for the first quarter of 2011, as provided by the analysts, range from a low of 18 cents to a high of 23 cents. Thus, the current Zacks Consensus Estimate for the quarter is pegged at 20 cents per share.
Over the past 30 days, none of the analysts revised the earnings estimate and hence the current Zacks Consensus Estimate remained at 20 cents. However, the fiscal 2011 earnings estimate dropped by a penny over the last 30 days.
Earnings History: Ahead of Zacks
With respect to earnings surprises, Sara lee has topped as well as missed the Zacks Consensus Estimate in the preceding four quarters. Over the last four quarters, the earnings surprise ranged from a negative of 55.00% to a positive of 24.00%, with the average earnings surprise being a negative 15.7%. This suggests that Sara Lee has missed the Zacks Consensus Estimate.
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Sara Lee Corporation
Global manufacturer and marketer in the packaged meats, frozen baked goods, shoe care, coffee, hosiery, underwear, fleecewear, and bra industries.
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Sara Lee Corporation (NYSE:SLE) Contact Information Sara Lee Corporation 3500 Lacey Rd. Downers Grove, IL 60515-5424 IL Tel