Sara Lee Renames Itself Hillshire Brands
(Dow Jones Newswires) - Sara Lee Corp. (SLE) will change its name to Hillshire Brands Co., part of a broad looming effort to split off its Europe-based beverage business and rescue steadily falling sales of packaged meat products.
The Downers Grove, Ill.-based company disclosed the name change at an investor meeting in New York on Tuesday to describe what it will look like later this month, when the company spins off its more successful European coffee-and-tea business, the recently re-named D.E. Master Blenders 1753, a nod to its popular Douwe Egberts coffee brand.
The company's move to promote the Hillshire name points to Sara Lee's need to revamp its well-known line of Hillshire Farm-brand luncheon meats and other brands. As commodity costs spiked in recent years, the company trimmed investments to develop and market its best-known labels, the company's new executive team said. On Tuesday, they vowed to roll out new products and marketing campaigns for household names such as Ball Park hot dogs, Jimmy Dean sausage and State Fair corn dogs. One example: Ball Park sliders.
Chief Financial Officer Mary Henry told investors that the company's sales volumes, excluding the beverage business, have fallen 7% over nearly four years. Revenue rose 12%, and Ms. Henry said the company's efforts to pass on higher commodity costs ended up scaring off some consumers.
A lack of new products and features also contributed to the decline, newly appointed Chief Executive Sean Connolly told investors Tuesday. "Some of our franchises have been under-managed and have under-delivered," he said. "We will fix that."
Executives said the company will spend more on marketing and promotion than it has in years past. After spending 3% to 4% of revenue on marketing over the past decade, Ms. Henry said the company will soon spend 5% of revenue.
Shares in Sara Lee were recently unchanged at $20.44. They're up 8% so far this year.
The move to take the name Sara Lee off the company's letterhead also reflects a long, steady move away from its frozen baked goods, such as pies and cheesecakes, that made Sara Lee a familiar name for grocery shoppers. Although the company still sells frozen desserts to restaurants, most retail dessert products with the Sara Lee name are now made by other companies. In their place, Sara Lee pushed hard into lines of deli meats, sausages and convenience foods, including pre-made breakfasts.
Unlike other packaged-foods companies, which typically turn out a mix of branded products and generic labels, nearly 90% of Sara Lee's sales come from brands. Mr. Connolly said the company will consider retreating from private-label and other less-profitable businesses.