Suburban-based Sara Lee reports 15 percent profit hike

MILWAUKEE -- Sara Lee Corp. said Wednesday its fiscal first-quarter profit rose 15 percent as the maker of Hillshire Farm deli meat benefited from a weaker dollar and raised prices to help offset rising commodity costs.

But the company lowered its outlook for the next fiscal year because of a stronger dollar and shares outstanding, and suspended its buyback plan.

The Downers Grove-based company said profit rose to $230 million, or 32 cents per share in the three-month period ending Sept. 27. That was up from earnings of $200 million, or 28 cents per share, in the same period last year.

Revenue rose 10 percent to $3.35 billion from $3.05 billion a year earlier, on sales growth in key business units like North American retail and fresh bakery, and international household and body care.

The earnings beat the expectations of analysts who had predicted, according to Thomson Reuters, that Sara Lee would earn 23 cents per share on sales of $3.35 billion in the quarter.

Sara Lee said net sales rose 10.6 percent to $680 million in its North American retail unit, and the gains were driven by higher unit volumes, higher prices and favorable sales mix -- meaning more expensive products were bought. Unit volume rose 2.5 percent, driven by sales of Ball Park hot dogs, Hillshire Farm smoked sausage, lunch meats, cocktail links and Sara Lee frozen sweet goods. Many key brands, including Jimmy Dean, Senseo and Ball Park, increased their market share in the quarter.

North American Fresh Bakery net sales grew 17.1 percent to $571 million, also driven by higher prices to offset input costs and volume growth of 6.6 percent. The company said it saw growth in branded and private label fresh bakery products. Sara Lee said its market share for its namesake bread, according to Information Resources Inc., grew 0.6 percentage point in the quarter to 8.8 percent market share, further solidifying its lead as the nation's top fresh bread brand.

The company lowered its guidance for 2009, saying that was entirely based on the stronger dollar. It also suspended its share buyback program.

"Given the current nature of the financial markets, most notably the credit market, the corporation has suspended its share repurchase program until market conditions improve," Sara Lee said.