Byline: Catherine M. Curan

NEW YORK — Spurred by stronger sales of foundations and knit products and of higher-margin hosiery items, Sara Lee Corp.’s personal products business posted an 11.2 percent gain in second quarter operating profit. In the quarter ended Dec. 31, operating profit for the segment division rose to $199 million from $179 million. Sales jumped 12.2 percent to $1.9 billion from $1.7 billion. Worldwide foundations unit volume was up 14 percent with double-digit gains in North America and Europe. Worldwide knit products unit sales gained 5 percent, with higher sales in the U.S. but flat sales in Europe. In the U.S., strong underwear and screenprint unit sales were partially offset by lower fleecewear sales, the company said. While worldwide sheer hosiery unit sales fell 7 percent, operating margins rose in major markets because of fewer promotions and greater sales of higher-margin products. Worldwide legwear unit sales declined 4 percent, with a 12 percent gain in worldwide sock units but a 7 percent decline in sheer hosiery units.
In the six months, operating income in personal products climbed 7 percent to $342 million from $319 million. Overall sales in the sector rose 12.6 percent to $3.7 billion from $3.3 billion.
In the half, foundations unit sales climbed 13 percent and worldwide knits products volume grew 10 percent. Worldwide legwear units fell 6 percent, with an 8 percent decline in sheer hosiery volume and a 5 percent gain in sock unit sales. John McMillin, analyst at Prudential Securities, said Sara Lee’s earnings were in line with his expectations. “The company is showing improved results for the personal products division as losses in Europe are moderating,” he noted. McMillin said that domestically, sheer hosiery appears to be stabilizing, and results of flat to slightly down sales are better than a year ago.
“Champion did very well,” he said, citing this division as one to watch for continued growth. “It’s not their largest division,” he said. “But it could be.”
In the second quarter, corporate profits at Chicago-based Sara Lee rose 6.5 percent to $245 million, or 50 cents a share, from $230 million, or 47 cents, a year ago. Sales climbed 15.9 percent to $4.6 billion from $4 billion.
In the half, earnings were up 17.4 percent to $404 million, or 82 cents, from $344 million, or 77 cents, after a $35 million accounting charge. Sales in the six months rose 14.5 percent to $8.9 billion from $7.8 billion.
Looking ahead, analyst McMillin projects accelerated earnings growth in the upcoming quarters. For the full year, he expects earnings per share of $1.57 against $1.43.
Net interest expense at Sara Lee in the quarter jumped 39.4 percent to $46 million from $33 million and, in the half, climbed 40 percent to $91 million from $65 million. Sara Lee said the increases reflect higher interest rates. — Fairchild News Service