Sara Lee Earnings Cheat Sheet: Margins Shrink Again, Net Income Falls

S&P 500 (NYSE:SPY) component Sara Lee Corp. (NYSE:SLE) posted a decrease in profit as revenue declined. Sara Lee Corp is a global consumer-goods company, manufacturing and marketing a range of high-quality branded meats, bakery, and beverage products.

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Sara Lee Corp Earnings Cheat Sheet for the Fourth Quarter

Results: Net income including results from discontinued operations for Sara Lee Corp. fell to $111 million (19 cents per share) vs. $187 million (28 cents per share) a year earlier. This is a decline of 40.6% from the year earlier quarter.

Revenue: Fell 17% to $2.3 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: SLE reported adjusted net income from continuing operations of 20 cents per share. By that measure, the company met the mean estimate of 20 cents per share. It beat the average revenue estimate of $2.22 billion.

Quoting Management: “During the last six months, we have madesignificant strides toward creating two pure-play companies which are poised for success,” said Sara Lee Executive Chairman, Jan Bennink. “Our objective of building two simpler, faster and more entrepreneurial businesses is being realized. We have defined the organizational framework for our new companies and are continuing to build and restructure our teams for the future. Through our strategic divestments, we are achieving our objective of streamlining the portfolios to provide the best foundation for strong and focused businesses moving forward. We are heartened by the fact that we have been able to deliver solid results for fiscal 2011 while managing difficult commodity conditions and the internal challenges of the spin off. The inherent strength of these two businesses, combined with a new focus and orientation, give me confidence that the two companies will be highly successful when they separate in the first half of calendar 2012,” concluded Bennink.

Key Stats:

Last quarter marked the fifth straight quarter that the company saw shrinking gross margins as gross margin fell 6.3 percentage points to 30.2% from the year earlier quarter. Over that time, margins have contracted on average 4.2 percentage points per quarter on a year-over-year basis.

Revenue has fallen in the past four quarters. Revenue declined 13.9% to $2.22 billion in the third quarter. The figure fell 17.8% in the second quarter from the year earlier and dropped 0.5% in the first quarter from the year-ago quarter.

The company topped expectations last quarter after falling short of forecasts in the third quarter with net income of 24 cents versus a mean estimate of net income of 25 cents per share.

Competitors to Watch: Unilever plc (NYSE:UL), Bridgford Foods Corp. (NASDAQ:BRID), The Hain Celestial Group, Inc. (NASDAQ:HAIN), Lancaster Colony Corp. (NASDAQ:LANC), J&J Snack Foods Corp. (NASDAQ:JJSF), Kraft Foods Inc. (NYSE:KFT), Flowers Foods, Inc. (NYSE:FLO), Snyder S Lance Inc (NASDAQ:LNCE), Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR), and TreeHouse Foods Inc. (NYSE:THS).

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(Source: Xignite Financials)

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