* Hillshire Brands to trade under "HSH" on NYSE
* Plans $100 mln in savings by 2015; sales and volume growth
* Sara Lee shares up slightly
By Martinne Geller
June 5 Sara Lee Corp will change its
name to Hillshire Brands Co later this month to reflect its
focus as a North American meat company after it spins off its
coffee and tea unit.
Sara Lee revealed the company's name and its financial and
strategic goals in a meeting on Tuesday with investors in New
Hillshire, with $4 billion in revenue and brands including
Jimmy Dean sausages, Ball Park hot dogs and Hillshire Farm lunch
meat, will trade on the New York Stock Exchange under the ticker
As a stand-alone entity, Hillshire Brands plans to improve
its existing performance by cutting costs, turning around its
weaker brands, launching more innovative products and increasing
and improving its advertising.
The company is targeting revenue growth of 4 percent to 5
percent by the end of 2015 and volume growth of 2 percent to 3
percent, according to Sean Connolly, who will be the company's
chief executive officer.
Hillshire Brands expects to continue at the same rate of
revenue growth beyond 2015 and sees profit growth growing faster
The company is also aiming for an operating margin of 10
percent and a near-term dividend payout ratio of 30 percent to
One part of the business that needs improvement, Connolly
said, is the company's flagship Sara Lee brand, which sells
lunch meat as well as pies and other baked goods. He said the
brand is working on developing deli products that can set it
apart from competitors.
The original Sara Lee was the daughter of Charlie Lubin, a
bakery owner, who named a new line of cheesecake for her when
she was 8 years old. Lubin sold his company in 1956 to
Consolidated Foods, which changed its name to Sara Lee Corp in
1985, according to the Sara Lee Corp website.
Hillshire Brands will also increase its budget for
marketing, advertising and promotions to 5 percent of revenue,
from 3.6 percent now. It also plans to increase the percentage
of revenue coming from new products, said Connolly, who now
heads up Sara Lee's North American Retail and Foodservice unit.
The company said it was working on new products, including
Jimmy Dean sandwiches made with french toast and pancakes, Ball
Park hamburgers and BBQ chicken sliders and Whole Grain State
Fair corn dogs.
Hillshire Brands, which will emerge as a standalone company
on June 28, also expects $100 million in additional cost savings
by the end of 2015.
ACQUISITIONS ARE SECOND PRIORITY
Sara Lee announced a plan to separate into two companies
after takeover offers for the whole company were not
Some on Wall Street still see the company as a potential
takeover target once the spin-off is complete, according to an
executive at Smithfield Foods Inc, who said in March
that he was fielding many calls from investment bankers on the
Hillshire Brands executives declined to comment on the
prospect of a takeout, although Connelly said the company would
be interested in bolt-on acquisitions after it shores up weak
spots in its existing portfolio.
Hillshire Chief Financial Officer Maria Henry said the
company could finance acquisitions with debt or stock, but noted
that if Hillshire's stock has a takeover premium baked in, the
company would not use it as currency in a deal.
The company's strategic goals include targeting additional
consumer segments, including Hispanics and younger consumers,
and expanding into different types of stores such as warehouse
clubs and dollar stores.
The business being spun off by Sara Lee is an international
coffee and tea business to be called D.E. Master Blenders 1753.
Sara Lee shares closed up 0.4 percent at $20.53 on the New
York Stock Exchange.