--New name reflects need to rescue sales of Hillshire Farm and
other brands
--Changes come ahead of late June spinoff of European beverage
divisions
--New management team calls for higher spending on product
development and marketing
Sara Lee Corp. (SLE) will change its name to Hillshire Brands
Co., part of a broad looming effort to split off its Europe-based
beverage business and rescue steadily falling sales of packaged
meat products.
The Downers Grove, Ill.-based company disclosed the name change
at an investor meeting in New York on Tuesday to describe what it
will look like later this month, when the company spins off its
more successful European coffee-and-tea business, the recently
re-named D.E. Master Blenders 1753, a nod to its popular Douwe
Egberts coffee brand.
The company's move to promote the Hillshire name points to Sara
Lee's need to revamp its well-known line of Hillshire Farm-brand
luncheon meats and other brands. As commodity costs spiked in
recent years, the company trimmed investments to develop and market
its best-known labels, the company's new executive team said. On
Tuesday, they vowed to roll out new products and marketing
campaigns for household names such as Ball Park hot dogs, Jimmy
Dean sausage and State Fair corn dogs. One example: Ball Park
sliders.
Chief Financial Officer Mary Henry told investors that the
company's sales volumes, excluding the beverage business, have
fallen 7% over nearly four years. Revenue rose 12%, and Ms. Henry
said the company's efforts to pass on higher commodity costs ended
up scaring off some consumers.
A lack of new products and features also contributed to the
decline, newly appointed Chief Executive Sean Connolly told
investors Tuesday. "Some of our franchises have been under-managed
and have under-delivered," he said. "We will fix that."
Executives said the company will spend more on marketing and
promotion than it has in years past. After spending 3% to 4% of
revenue on marketing over the past decade, Ms. Henry said the
company will soon spend 5% of revenue.
Shares in Sara Lee were recently unchanged at $20.44. They're up
8% so far this year.
The move to take the name Sara Lee off the company's letterhead
also reflects a long, steady move away from its frozen baked goods,
such as pies and cheesecakes, that made Sara Lee a familiar name
for grocery shoppers. Although the company still sells frozen
desserts to restaurants, most retail dessert products with the Sara
Lee name are now made by other companies. In their place, Sara Lee
pushed hard into lines of deli meats, sausages and convenience
foods, including pre-made breakfasts.
Unlike other packaged-foods companies, which typically turn out
a mix of branded products and generic labels, nearly 90% of Sara
Lee's sales come from brands. Mr. Connolly said the company will
consider retreating from private-label and other less-profitable
businesses.
-Write to Marshall Eckblad at marshall.eckblad@wsj.com