Over the years, Sara Lee was broadly known for their catchy slogan of “Everybody doesn’t like something, but nobody doesn’t like Sara Lee,” which mainly pertained to the companies bakery group; but Sara Lee Corporation was so much more. The Sara Lee Bakery Group was a division of a larger Sara Lee Corporation which had product lines including such categories as packaged meats, coffee, tea, underwear, intimate apparel, body care, air care, shoe care and air fresheners. In 2006, the slogan was changed to “the joy of eating” to go along with a major transformation of the company into a smaller number of core businesses which focused more tightly on food, beverage, and household products.
In February 2005, Brenda Barnes, Sara Lee’s newly appointed president and CEO, announced a strategic plan to transform Sara Lee into a more tightly focused food, beverage, and household products company. The centerpiece of Barnes’s transformation plan was the divestiture of weak-performing business units and product categories accounting for $8.2 billion in sales - 40% of Sara Lee’s annual revenue. Barnes believed that Sara Lee could benefit from concentrating its financial and managerial resources on a smaller number of business segments where market prospects were promising and Sara Lee’s brands were well positioned. As the first phase of Barnes’s transformation plan, Sara Lee was to exit eight businesses: Direct selling, U.S. retail coffee, European apparel, European nuts and snacks, European rice, U.S. meat snacks, European meats, and Sara Lee branded apparel. (1) Direct Selling was a $450 million business that sold cosmetics, skin care products, household products, etc. It was sold to Tupperware Corporation for $547 million in cash. (2) U.S. retail coffee was a $213 million business that marketed several private-label coffees. It was sold to Segafredo Zanetti Group for $82 million. (3) European apparel was a global garment producer and had sales of nearly $1.2 billion. The business was sold to an affiliate of Sun Capital Partners for $115 million. (4) European nuts and snacks had $88 million in annual sales and were sold to PepsiCo for about $160 million. (5) European rice was sold for $62 million. (6) U.S. meat snack had sales of $33 million and was sold for $9 million. (7) European meats were a $1.1 billion business and were sold for $575 million in cash. (8) Sara Lee branded apparel had sales of $4.5 billion and was spinned of as an independent company named Hanesbrands Inc. Management expected the retrenchment initiatives to generate combined net after-tax proceeds in excess of $3 billion [Thompson, Peteraf, Gamble, and Strickland 2012].
After the divestiture of Sara Lee Corporation’s nonstrategic businesses in 2006, management focused their attention on increasing the sales, market shares, and profitability of the remaining businesses. The company’s goals were to increase sales to at least 14 billion, and increase profit margin to 12% by 2010. Additionally, executives believed that the retrenchment strategy would generate sufficient cash flows to pay the company’s total debt down to between $1.5 and $2 billion by fiscal 2010, pay substantial dividends to shareholders, and repurchase shares of common stock. Sara Lee planned to achieve these objectives by developing three competitive capabilities which included a strong focus on the consumer through competitive pricing, innovative new products, and brand-building; category management and leverage through size; and, operating excellence through lean manufacturing and economies of scope [Arthur A. Thompson…[et al.] 2012].
In 2008, after showing little progress in increased profit margins, Sara Lee launched an initiative called Project Accelerate. Project Accelerate included business process outsourcing, restructuring of operating segments, and reductions in corporate overhead. By creating Project Accelerate, Sara Lee Corporation sought to strengthen the company’s ability to achieve a 12 percent profit margin by 2010. By 2010, Project Accelerate had saved the company $180 million with expected cumulative benefits to reach $350 million to $400 million by the end of fiscal year 2012. During 2010, Sara Lee had engaged in further retrenchment with the divestiture of its International Household and Body Care business that produced and marketed Kiwi shoe care products, Sanex personal care products, AmbiPur air fresheners, and various insecticides and cleaning products sold outside North America [Arthur A. Thompson…[et al.] 2012].
On January 28, 2011, Sara Lee announced that its board of directors had agreed to divide the company into two separate, publically traded companies. Hillshire Brands, which include the Hillshire Farm, Jimmy Dean and Ball Park brands as well as frozen desserts and other bakery products. The other company to emerge from Sara Lee will be an international coffee and tea company called D.E. Master Blenders 1753 [The Associated Press, 2012].
Although Sara Lee Corporation focused on cutting back business operations between 2005 and 2010, the company’s has continued to utilize a broad differentiation strategy. Sara Lee does not aim to have the lowest price product or to only sell to a small niche of the market. They aim to differentiate themselves from other brands by showing the value of their brand name and their higher quality products.
From 2008 to 2010, Sara Lee’s net profit margin has trended positively from loss to profit. In 2010, every $1.00 in sales provided $0.05 in net profit. This shows significant progress as Sara Lee Corporation improves its ability to reinvest, save, and support dividend awards. Sara Lee Corporation also improved its use of company assets. In 2008 the company produced no profits, actually a loss of $0.01, from its assets. Now, the company earns $0.06 profit for every $1.00 in assets. Sara Lee’s positive trend up on a year-over-year basis indicates strengthening asset utilization. From 2008 Sara Lee Corporation has consistently increased return on equity In Yr. 2010 each $1.00 in equity produced $0.33 in net income. Sara Lee’s increasing net profit margins and higher return on assets signals strong strategy results [WordPress, 2011].

References
The Associated Press. (2012, June 6). Sara Lee splits, takes Hillshire name for N. Amer. business. Retrieved July 6, 2012, from http://www.usatoday.com/money/companies/story/2012-06-06/sara-lee-hillshire-brands/55416180/1

Thompson, A. A., Peteraf, M. A., Gamble, J. E., & Strickland, A. J., III. (2012). Crafting and Executing Strategy: The Quest for Competitive Advantage: Concepts and Cases (18th ed.). McGraw-Hill .

WordPress. (2011, November 5). STRATEGY, right or wrong? Using Financial Analysis to review Meat Processing Leaders. Retrieved July 6, 2012, from http://www.thomasroberts2.com/