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BOCA RATON, Fla., Feb 19 (Reuters) - Sara Lee Corp SLE.N, the second-largest U.S. bread maker, said on Tuesday it would raise bread prices during the April-June period -- its fourth price increase in the last year and a half -- as it tries to cope with soaring wheat costs.
The increase will not necessarily be across the board, the company said.
“We are going to think about it more surgically, market by market,” CJ Fraleigh, chief operating officer North America, said during a news conference with reporters following the company’s presentation at the Consumer Analyst Group of New York conference in Florida.
Sara Lee has also taken other steps in an effort to improve profit in a bread business that has been a drag on the company’s margins.
Those steps at times include using a lesser quality of wheat in some of the regional bread brands it sells, Fraleigh said. The company does not tinker with the wheat used in its Sara Lee bread, which is a stronger brand that can entice consumers to pay a higher price than private-label competitors, Sara Lee executives said.
Sara Lee has already taken two 10-cent price increases and one smaller increases in the last 1-1/2 years, but has not seen any push-back from consumers dealing with rising costs for food and gasoline and falling home values, Barnes said.
Overall, Sara Lee expects to be able to take price increases across its business to offset an additional $300 million in cost increases during fiscal year 2008, said chief executive Brenda Barnes.
Over the past several years, Sara Lee has cut costs, jettisoned business lines and worked to improve its products in a sweeping overhaul.
The company is now at a point where it can consider more acquisitions to fit into its core categories of meat and cheese, bread and baked goods, international coffee and international household and body care products, Barnes said.
“We are at a different stage of our evolution,” Barnes said of the ability to make acquisitions.
She declined to say if there were any specific limits to the size of acquisitions the company could make.
“You have to be able to afford it and generate a return,” Barnes said.
Sara Lee shares closed down 10 cents at $13.19 on Tuesday on the New York Stock Exchange, after hitting a 52-week low earlier in the day.
Reporting by Brad Dorfman, editing by Gunna Dickson
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