Sara Lee to remove clothes
Sara Lee has always struck as a bit of an anomaly. As we've outlined before, it specializes in several areas: baked goods, coffee, prepared meats, household cleaning products, and clothing. All these divisions do reasonably well, but it's hard to understand the synergies between selling food to supermarkets and selling socks and underwear to department stores and discounters. Apparently, the company's new CEO has figured that out.
The clothing division, with brands like Playtex, Hanes, and Champion, has annual revenue of $8.2 billion. Sara Lee plans to spin it off as an independent company. The company earlier announced it would sell its $1.8 billion European clothing business. The moves will make the company less of a conglomerate, and more of a focused food oligopoly. The new company will be one of the world's top apparel makers.
Discarding even successful divisions is becoming more and more important as companies concentrate on areas they feel they can win. It will be interesting to see the spin-off remains as a separate company or whether it will attract other buyers. Most of the company's apparel products (socks, underclothing, sportswear) are somewhat protected against the vagaries of fashion and some of the other factors that have hurt the industry as a whole.
The next question is whether Sara Lee will continue to compete in household cleaning products against giants Unilever and Procter & Gamble. As Sara Lee's outgoing CEO is quoted as saying "We'd rather have big No. 1 or No. 2 brands than 50 brands [in] a lot of different categories." (Wall Street Journal, "Sara Lee to Spin Off Apparel Arm", 2/11/2005)
11:59:55 AM 
|
|
