Any baker will tell you that dough rises in the oven. Back in August, when Sara Lee
But it seems the company behind Hanes undies was covering something. Thanks to margin-pumping efficiency, Sara Lee now sees September quarter earnings coming in closer to $0.35 a share. At least.
While sales rose by about 7%, operating profits surged by 20%. Sara Lee has been able to reduce its operating costs, while shifting sales to higher-margin products. The turnaround process has been two years in the making. By focusing on core brands and shedding unwanted subsidiaries, Sara Lee's strategy is finally paying off. And it's about time.
While Sara Lee's a household name, the stock has been a market laggard over the years. The stock has merely doubled over the past 10 years, and it would have to climb 50% higher to hit the same levels at which it peaked back in 1998. Then again, maybe "merely doubled" is a bit harsh. Fellow supermarket stockers such as Heinz
With the 2003 fiscal first quarter kicking off with such a bang, the company is also hiking its expectations for the entire year. Sara Lee now hopes to earn between $1.54 and $1.60 a share, implying that it thinks more than the first quarter will surprise analysts.
So, let Sara Lee turn up the heat on its cost-cutting efforts. It will only make the dough rise higher.