By  on January 25, 2002

NEW YORK -- Impacted by restructuring initiatives and profit declines in its apparel business, Sara Lee on Thursday posted an 80 percent drop in second-quarter income, even though sales were up 5 percent.

Net income for the three months ended Dec. 29 was $160 million, or 20 cents a diluted share, versus $798 million, or 92 cents, in the year-ago quarter. Excluding unusual items in connection with the divestiture of certain businesses, earnings per share would have been down 14 percent to 37 cents versus 43 cents. The firm also recognized a tax-free gain of $105 million in the quarter from the completion by Coach, Sara Lee's subsidiary, of an initial public offering of 19.5 percent of its common stock. Sales were up 5 percent to $5 billion from $4.8 billion.

In the intimates and underwear category, operating income in the quarter was down 44.2 percent to $155 million from $278 million. Sales were down 18 percent to $1.75 billion from $2.13 billion. The division includes the firm's global intimate apparel, knit products and legwear operations. Sara Lee said that the results reflect the challenging retail markets and the increased marketing spending behind the company's Hanes and Hanes Her Way brands.

Intimates and Underwear unit volumes dipped 2 percent in the quarter, but inched up 1 percent for the six months. For the first half, increased global knit product units, strong sock volumes and higher U.S. intimate apparel volumes offset weak European intimate apparel and global sheer hosiery unit sales.

Sara Lee shares lost 98 cents to close at $20.98 in New York Stock Exchange trading Thursday.

For the six months, corporate income was down 61.8 percent to $402 million, or 49 cents, compared with $1.1 billion, or $1.20, in the same period last year. Sales rose 3.2 percent to $9.5 billion from $9.2 billion.

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