SARA LEE LOOKS AT THE BIG PICTURE
Byline: Margaret Littman
CHICAGO — Sara Lee Corp. is banking on plus-size women to push its Just My Size label to sales of $1 billion as early as 1999.
That forecast came from Donald J. Franceschini, executive vice president responsible for the firm’s personal products group, at Sara Lee’s annual meeting here last week.
An audience of some 1,700 gathered at the Art Institute of Chicago for the meeting of the giant diversified food and consumer products company, whose sales in fiscal 1996 came to $18.6 billion. Visitors more than filled the Institute’s Arthur Rubloff Auditorium, and the overflow watched the proceedings on video in an adjoining room.
“Just My Size is our newest megabrand,” said Franceschini. “A line we started in 1984 has expanded into a $200 million brand this year, and we have a goal of $1 billion within the next three to five years.”
To meet that goal, the company will expand the plus-size line from knits, intimate apparel and hosiery to denim jeans, vests and blouses, he said.
“People in America are getting fatter,” added John H. Bryan, Sara Lee’s chairman and chief executive officer, who addressed the shareholders and held a press session afterwards. “For our food business, that means more people are trying to eat foods without fat in them. For our Just My Size line, it means business is good.”
This megabrand is being supported with television commercials featuring plus-size models in knit shorts and intimate apparel. The ads have an 800 number consumers can call for information on where to find the clothes.
Such support is the crux of the personal products group’s plans to build its brands; its most recent first-quarter operating profits were down 5 percent, compared with an annual compound growth rate of 9.7 percent for the years 1991 through 1996. As reported, operating earnings for personal products dropped to $152 million from $160 million in the quarter ended Sept. 28. Sales in the three months were ahead 0.5 percent to $1.89 billion.
“This first-quarter drop was as planned,” said Michael E. Murphy, vice chairman and chief administrative officer, “because we needed to invest in increased media spending. We expect operating profits to be up for each of the remaining quarters this year and for the full fiscal year 1997.”
For fiscal 1996, the personal products division’s sales topped $7.37 billion, a 3.1 percent increase over the previous year, and accounted for 40 percent of overall company sales. Operating profit was $729 million, up 10.8 percent.
The first quarter’s media blitz included celebrity endorsements of the Hanes Resilience and L’eggs Reliance hosiery lines, emphasizing the durability and strength of the hosiery. The Tina Turner campaign for Hanes Hosiery ties in with the singer’s 1996 tour and album cover and eventually will expand to include the Silk Reflections and Smooth Illusions brands.
Brand-building also will be key in leveraging the success of 1995’s wonder, the Wonderbra, into a long-term opportunity for Sara Lee.
“When it started, the Wonderbra was just one style number,” Bryan pointed out. “Now we’re trying to take that specific style and make it a brand in the U.S.”
To sustain the momentum, the company plans to introduce 11 styles that lift and shape without adding cleavage.
“At first, we couldn’t keep up with demand for the Wonderbra, but now interest has cooled off. To make this a serious brand, we will have to position things a bit differently,” Bryan said. “The Wonderbra has functional capabilities that a younger audience may or may not want.”
“In order to achieve continued success in all intimate apparel, we have to realize that it’s not just size anymore,” Franceschini said. “Consumers want the sizes and comfort, but also shaping. That’s why we are focusing on side shaping and seamless panties.”
A Comforts Extras line, under the Hanes Her Way label, will offer full-figured women no-slip straps and no-poke underwires.
Executives reviewed other initiatives aimed at boosting sales:
Licensing agreements with Polo/Ralph Lauren and Carter’s children’s wear to create underwear, sleepwear, robes and T-shirts to be sold in department stores, as well as sportswear with the Spaulding sporting goods name. As reported, the Lauren line of innerwear is to make its retail debut in the spring.
The addition of footwear and men’s apparel to the upscale Coach leather accessories line, which pulled in $500 million in sales in 1996. Franceschini hopes the brand will break the $1 billion mark by the turn of the century with the addition of classic men’s shirts and ties and footwear for men and women, supported by billboards and print advertising.
An emphasis on direct selling of intimate apparel in developing countries, and the possible acquisition of an established direct sales company.
Shareholder questions and comments often dealt with specific products. For example, one woman complained that she bought a pair of L’eggs hosiery that had one reinforced toe and one sheer toe.
One shareholder, prompted by recent publicity about apparel sweatshops, asked about conditions in Sara Lee factories.
“The textile industry has gotten an enormous amount of attention about its working conditions,” Bryan answered. “We do have factories off shore, and both before and after that issue was forced into the limelight, we monitored our factories.”
Bryan said he and other directors of the company regularly tour Sara Lee factories, as well as suppliers’ factories. Franceschini has a large staff of inspectors who assure that the factories meet legal requirements, and the company has gotten “a clean bill of health” from U.S. government inspectors, Bryan said.