Sara Lee plans more price increases

CHICAGO Mon Mar 14, 2011 1:06pm EDT

Christopher J. (CJ) Fraleigh, chief executive officer, North America, and executive vice president of Sara Lee Corporation, speaks during the Reuters Food and Agriculture Summit in Chicago, March 14, 2011. REUTERS/Jeff Haynes

Christopher J. (CJ) Fraleigh, chief executive officer, North America, and executive vice president of Sara Lee Corporation, speaks during the Reuters Food and Agriculture Summit in Chicago, March 14, 2011.

Credit: Reuters/Jeff Haynes

CHICAGO (Reuters) - Sara Lee Corp SLE.N will raise prices in the high single-digit percentages on average this fiscal year, with increases on everything from Jimmy Dean sausage to frozen pies, an executive said at the Reuters Global Food and Agriculture Summit on Monday.

Christopher "CJ" Fraleigh, chief executive of Sara Lee's North American retail and food service business, said the company was preparing its fourth price increase of the current fiscal year, which started last July 5.

At the end of the fiscal year, prices for the company's North American products will be up 9 percent -- as Sara Lee works to offset the impact of cost spikes for pork, beef, wheat and coffee.

"We've been raising prices pretty steadily ... I would be hard-pressed to think of any product in our portfolio that hasn't seen a price increase," Fraleigh said.

The company has taken the biggest price increases on its Sara Lee frozen desserts, which include pies, due to higher costs for aluminum, dairy and wheat, he said.

While it has been a bit easier to pass higher prices through to shoppers than it was when commodity costs last jumped three years ago, consumers still are pushing back. As a result, volume has softened and in some cases, the company has had to backtrack.

On three different occasions, Sara Lee has retracted price increases on its lunch meats after competitors held the line on pricing, Fraleigh said.

Downers Grove, Illinois-based Sara Lee plans to split into two public companies focusing on North American meats and international coffee and tea. Fraleigh will become CEO of the remaining Sara Lee Corp, once the coffee business gets spun off. It expects the split to be done early in 2012.

Sara Lee is looking for North American, protein-based food businesses to buy. Fraleigh said he would prefer to do such a deal after its businesses are split.

"If one of those assets would become available, we'd want to participate in that," he said. "We wouldn't rule it out, but I think it would be unlikely that we would do something before the end of the calendar year."

Shares of the company were up 0.2 percent at $17.09 on Monday afternoon on the New York Stock Exchange.

The stock on Friday was down nearly 14 percent from the 52-week high touched on January 25, when sources told Reuters that Sara Lee received a verbal buyout offer from Brazilian beef processor JBS SA. (JBSS3.SA)

Three days later, Sara Lee announced its plan to split up its businesses, saying that unsolicited takeover bids for the whole company were unsatisfactory.

Sara Lee has said its split-up plan does not preclude a sale of the full company, should the right offer come along.

Chief Executive Officer Marcel Smits said in February that the company received takeover interest from enough parties that tax restrictions following a spin-off may not hinder a sale of the parts.