Baker`s Secret Sara Lee Cooks Up Success Through Diversification. June 20, 1989|The New York Times
CHICAGO -- Sara Lee and coffee cake are inevitably linked, but the company stands for more than breakfast food. Indeed, the shrewd management of brand names such as Hanes, L`eggs, Kiwi, Isotoner, Jimmy Dean and Hillshire Farm, has been the cornerstone of the Sara Lee Corp.`s success in the past decade.
That success has mystified many in the business world, because most large food companies have tried in recent years to diversify and have failed. ``From the beginning of the 1980s, most other food companies have been divesting their non-food businesses,`` said Nomi Ghez, a food industry analyst at Goldman, Sachs & Co. ``But Sara Lee actually grew in this area.`` ``The company turns out amazingly consistent results,`` said John McMillin, an analyst at Prudential-Bache Securities, evaluating the financial performance of Sara Lee in recent years. ``It`s almost like watching a clock tick. It just keeps ticking, up and up and up.`` John H. Bryan Jr., Sara Lee`s chairman and chief executive officer, said the secret is fairly simple: His company sees itself as a branded consumer product manufacturer, whether that product happens to be food or not. ``It appears to some people that the coexistence of hot dogs and cheesecakes and pantyhose is anomalous,`` Bryan said. ``But it makes infinitely more sense than being tied behind a strategic fence that says `food.``` By using this strategy, Sara Lee has steadily grown to become one of the world`s largest manufacturers of packaged consumer goods, with worldwide sales last year of $10.4 billion. The company has interested investors this year with quarterly results that indicate Sara Lee will increase earnings per share in 1989 by 20 percent or more for the second consecutive year -- a strong increase compared with the 10 percent to 12 percent yearly increase that is normal in the industry. Between 1983 and 1988, Sara Lee`s...
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