NEW YORK — Lee A. Chaden, the new chief executive officer of Sara Lee Branded Apparel, said he is poised to grow the $6.4 billion division over the next several years in the global arena.
In a telephone interview from Sara Lee’s distribution center in Winston-Salem, N.C., Chaden told WWD, “I’ve literally been at my new post since 8 a.m. Monday. I believe in growth and am absolutely confident we can grow this [branded apparel] business tremendously.”
Chaden, 63, said he planned no changes following the abrupt exit of his predecessor, Cary D. McMillan, which was announced Sunday. “I think I’m going to build on the initiatives and strategies that Cary put into place. We’ve been colleagues and friends. I don’t see any major changes.”
McMillan had been in the job since November 2001.
Chaden, who most recently was executive vice president of global marketing and sales for Sara Lee Corp. and remains an executive vice president of Sara Lee Corp., would not elaborate on those initiatives and strategies, but at a Sara Lee conference with investment banking firm Shields & Co. on Feb. 27, McMillan and Chaden discussed the company’s long-term strategies to increase its profitability and growth rate. The four basic elements governing Sara Lee’s actions included investing in organization, focusing on cash generation, developing innovative products and investing in key brands.
McMillan could not be reached regarding his departure from Sara Lee, and Chaden would not discuss the matter. However, a Sara Lee spokeswoman said, “To my knowledge, [McMillan] hasn’t chosen to talk about his personal reasons for leaving the company.”
According to a Merrill Lynch analysis of Sara Lee released Monday, McMillan “led the company’s largest division and was widely viewed as a possible successor to Sara Lee ceo Steven McMillan” (who is no relation to Cary). The report noted that, while Cary McMillan made significant operational changes to streamline the apparel operation, it was affected by a tough retail environment, skyrocketing pension costs and higher cotton prices, which overshadowed a number of positives from restructuring. “The restructuring is not complete and the business must contend with the major changes in apparel import quotas in 2005,” it said.
Regarding Chaden, the Merrill Lynch report said, “[He] will probably be able to contend with the issues at hand fairly quickly, given that he has spent many years working in the apparel division.”
In the most recent quarter ended March 27, branded apparel sales increased 4.5 percent to $1.56 billion from $1.5 billion a year ago, while operating income declined 23.3 percent to $142 million from $185 million a year ago. Sara Lee attributed the segment’s decline to price pressures and an unfavorable product mix, as well as higher cotton and pension costs.
For the nine-month period, branded apparel’s income dropped 33.9 percent to $401 million from $607 million, while net sales fell 1.2 percent to $4.81 billion from $4.86 billion.
Chaden joined Sara Lee in 1991, was named ceo of Sara Lee Intimates in 1994, was elected a vice president of Sara Lee Corp. in 1995 and a senior vice president in 1998. In 1999, he became ceo of Sara Lee Branded Apparel in Europe and in 2001, was appointed to the new post of senior vice president of human resources for the corporation.
Gilbert Harrison, chairman of Financo Inc., an investment firm, observed, “Lee is an extraordinarily talented person. We worked with him before on Sara Lee mergers when he was with domestic [operations]. We were very impressed with his grasp of the market and his knowledge of the [apparel] industry. I believe he will continue to grow Sara Lee products.”
As to how Chaden plans to expand the reach of its portfolio of intimates brands that in fiscal 2003 generated annual revenues of $6.4 billion of Sara Lee’s overall $18.3 billion, Chaden said the strategy is threefold: continuing to bring meaningful product news to the marketplace, gleaning insight from core consumers and supporting these initiatives with technological breakthroughs.
Among the portfolio of brands Chaden will oversee are: Hanes Her Way for women, which generates annual volume of over $1.6 billion; Playtex, which does more than $800 million, Bali, which has yearly sales of more than $500 million, and Champion for women, which does more than $500 million annually. He will also steer Wonderbra, DIM, Barely There and Just My Size.
Asked which brands and categories are expected to provide the largest opportunities for Sara Lee, Chaden replied, “With the exception of hosiery, which has leveled off and I don’t think will return to its glory days, I envision growth opportunities across our entire portfolio. The thing I am so enthusiastic about is our unique position in brands, resources and technology.”