2011 Sara Lee Corporation Retrenchment Strategy

In 2005, Brenda Barnes, CEO of Sara Lee proposed a bold and ambitious strategic plan to transform Sarah Lee into a more tightly focused food company.  The centerpiece of Barnes’ transformation plan was the divestiture of weak-performing business units and product categories account for $7.2 Billion or 37% in sales.  Barnes’ initiative would cut Sara Lee’s revenues by $7.5 Billion believing it would be better off concentrating its financials and managerial resources on promising resources from already placed business segments.  This “retrenchment” initiative would drive the company’s boosting sales, market shares, and profitability in their remaining brands: Sara Lee breads and bakery products, Ball Park meats, Douwe Egberts coffees, Hillshire Farm meats, Jimmy Dean sausage, and Senseo single-serve coffee products.

BY Fiscal year 2010, Sara Lee has shown small revenue increase missing both revenue and operating profit margin projections.  Brenda Barnes was forced to step down as CEO before suffering a stroke.

1. What is Sara Lee’s corporate strategy? How has its retrenchment strategy changed the nature of its business lineup?

Sara Lee has completely changed its strategy and how the company does business.  They have chosen to retrench their target business segments in the markets their in strengthening market share.  In order to do that Sara Lee did the following:

A) Sarah Lee sold its “direct selling” portion to Tupperware Corporation for $547 Million in cash.  This business sold cosmetics, skin care products, fragrances, toiletries, household products, apparel, and other products in 18 different countries.

B) “U.S. Retail coffee” was sold to Italy-based Segafredo Zanetti Group for $82 Million.  Well-known Chock full o’Nuts, Hills Bros., MJB, and Chase and Sanborn coffees plus several private labels were among those sold.

C) Sarah Lee’s “European Apparel” encompassing well-known brands such as Dim, Playtex, Wonderbra, Abanderado, and Nur Die sold in most countries in Europe including France, Germany, Italy, Spain, and England.  The European brand business had almost $1.2 Billion sales by end of 2005.  Sara Lee sold the branded apparel portion to an affiliate of Sun Capital Partners for $115 Million plus possible contingent payments based on performance.

D) A small business portion, “European rice” was sold to Grupo SOS of Spain for $62 Million.

E) “U.S. meats and snacks”, a small business unit with sales of $33 Million in 2005 was sold for $9 Million.

F) “European meats”, a $1.1 Billion packages meat business in Europe with respectable markets positions in multiple European countries was sold to Smithfield Foods for $575 Million.

G) Most importantly, “Sara Lee branded apparel” consisting of 10 branded apparel: Hanes, L’eggs, Champion, Bali, Barely There, Playtex, Wonderbra, Just My Size, Duofold, and Outer Banks was spun off into an entirely independent business called Hanesbrand Incorporated.


Sara Lee’s management expected the after tax benefits of the $3 Billion generated would increase market share overtime of their entrenched markets along with increased shareholder wealth.

5 thoughts on “2011 Sara Lee Corporation Retrenchment Strategy

  1. Pingback: Sara Lee Chooses Cheesecake Over Clothing | Stetson D. Saunders

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  3. Pingback: Did Sarah Lee Corporation strategy work for the company or against the company in 2011? | Project Management & Business Solutions

  4. Pingback: Renee D. Phillips | Sara Lee Corporation Case Study

  5. Pingback: Sara Lee’s Retrenchment Strategy | Victoria Guerra

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