Sara Lee Earnings Tumble on Higher Costs, Slow Sales

Sara Lee Corp. (SLE) Tuesday reported sharply lower quarterly earnings, weighed down by sluggish sales in Europe and higher prices for commodities including meat, coffee and cotton.

The maker of Hanes underwear (search), Sara Lee baked goods and a host of other items also forecast lower fourth-quarter profit than analysts expected, saying income will fall in four of its five operating units, with bakery being the only one expected to post an increase.

Sara Lee shares fell 5.5 percent on Tuesday on the New York Stock Exchange (search).

Net income for the fiscal third quarter ended April 2 fell to $189 million, or 24 cents per share, from $376 million, or 47 cents per share, a year earlier.

Third-quarter earnings included a 6 cents-a-share tax charge related to repatriation of $928 million in overseas earnings, a 1 cent-a-share charge related to its recently announced restructuring program and a 2 cents-a-share gain from the disposition of its canned meat business. Year-earlier results were boosted by 15 cents a share from a payment related to the company's 1999 sale of the European cut tobacco business.

Excluding one-time items, the maker of Jimmy Dean sausage (search) and other products earned 29 cents a share. Wall Street analysts had expected 31 cents per share, according to Reuters Estimates.

Earlier this year, Chicago-based Sara Lee announced plans to restructure into a company focused on meat, baked goods and household products by selling or spinning off businesses representing 40 percent of sales.

Sales rose 1 percent to $4.8 billion, helped by price increases for meat and coffee and the weaker dollar.

But volume, which factors out currency and price fluctuations, fell 4 percent, due to weaker sales of regional brands of white breads and pressure from higher coffee prices.

Sara Lee forecast fourth-quarter profit of 30 cents to 32 cents a share, down from 44 cents a share a year earlier. Analysts on average forecast 37 cents a share, according to Reuters Estimates.

Sara Lee shares were down $1.21 at $20.65 Tuesday on the New York Stock exchange.