SARA LEE SETS SALES OF CHAMPION, COACH
Byline: Nancy Brumback
CHICAGO — Sara Lee Corp. expects to complete the sale of its Champion apparel division within the next three months and to sell the remainder of its stake in the Coach leather goods company over the next year.
Those efforts are a part of the company’s repositioning, Sara Lee executives said at the firm’s 60th annual meeting held in Chicago on Thursday.
C. Steven McMillan, president and chief executive officer, said at a press conference following the meeting that about six companies are in the process of submitting bids for Champion.
“Most are looking at Champion as a whole, but we are not ruling out the possibility of separate pieces,” McMillan said, noting Champion’s U.S., European and Japanese businesses are different in the way they operate.
Responding to a stockholder question about the divestiture of Coach in an initial public offering, McMillan said the leather goods company “no longer fits with the vision of a reshaped Sara Lee,” where the emphasis will be on consumer packaged goods in three core categories of food and beverage, underwear and intimates and household products.
Coach’s IPO was for 19 percent of the shares. Sara Lee retained 81 percent, which it expects to sell over the next 12 months, depending on market conditions, McMillan said.
Sara Lee expects new product development to strengthen its already strong positions in its core category markets, McMillan told shareholders, citing as an example the success of Hanes’ Barely There seamless bras and panties.
He claimed Sara Lee already has a 37 percent share of the market in both men’s and boys’ underwear and in women’s underwear, plus a 48 percent share of the legwear market.
On Wednesday, Sara Lee had reported that profits had dropped 1.6 percent to $254 million in the first quarter ended Sept. 30, but that its intimates and underwear group saw operating profits move ahead 18 percent to $202 million. Sales for the segment increased 5 percent in the period to just more than the $2 billion mark.
Sales of branded apparel-intimate apparel, underwear and hosiery via the Internet is “one of our fastest-growing businesses,” McMillan told a shareholder who asked about online sales.
At the press conference, he said only one retail customer — Wal-Mart — had raised a question about Sara Lee’s direct-to-consumer sales.
“Since we’re selling more of our product on their Web site than we are on our Web site, they became convinced it wasn’t a competitive threat,” he said, adding that the price was lower in Wal-Mart than on the manufacturer’s Web site.
John Bryan, Sara Lee chairman, presiding over his 25th annual meeting and his next-to-last before he retires as chairman next October, drew praise from several shareholders for his leadership of the company.
But, the audience also applauded a shareholder who strongly questioned the retirement package Bryan will receive, which includes a 10-year consulting contract at $500,000 a year and a continuing role as a director.