NEW YORK — Sara Lee Corp.’s branded apparel business leveraged an improved inventory position as well as expense controls to bolster operating income in its third quarter, even as sales fell.
Separately, the company said it was selling its U.K.-based Courtaulds apparel business for an undisclosed sum.
For the quarter ended April 1, the business segment, which is being spun off from Chicago-based Sara Lee between June and September as Hanesbrands Inc., posted operating income that rose 28 percent, to $110 million from $86 million in the same period last year. Sales for the quarter fell 3 percent, to $1.04 billion.
The branded apparel business includes T-shirts, casualwear, activewear and innerwear.
The firm said in a statement the drop in sales “can be attributed to some inventory reductions in the mass retail channel, planned discontinuation of selected low-margin fleece and sleepwear programs, and continued weakness in the hosiery category, which was partially offset by double-digit sales growth for the Champion brand.”
Sara Lee also said the robust gain in operating income was “driven by improved inventory management, favorable cotton costs and lower [selling, general and administrative] expenses, which more than offset the effects of lower unit volumes and selected pricing actions in several categories.”
Sara Lee said sales growth in the Champion brand was in the double digits, and was fueled by “a solid performance of C9 by Champion.”
“New TV advertising spots for the Hanes brand, featuring Michael Jordan, Kevin Bacon and Christina Applegate, began to air during the quarter, and initial consumer reception has been positive,” the company said. “Knitting and cutting of T-shirt fabric began in a new production facility located in the Dominican Republic and output is running ahead of schedule.”
Regarding Courtaulds, which had sales of $560 million last year, Sara Lee said it was selling the apparel business to a group led by PD Enterprise Ltd. PD Enterprise is described as a “global garment producer.”
“The sale of Courtaulds is another step toward transforming Sara Lee into a world-class integrated operating company,” said Brenda C. Barnes, chairman and chief executive officer of Sara Lee Corp. in a statement. “As we continue to simplify our organization and focus on growing our core food, beverage and household and body care businesses, we are better positioned to drive long-term, sustainable growth for Sara Lee shareholders.”
The company is looking to close the deal by July 1. “Sara Lee’s interests in three Sri Lankan joint ventures that supply a portion of Courtaulds’ inventory were not included in this sale, and may be sold at a later date,” the company said.