Sara Lee reports progress in meat sector for Q2 results
Sara Lee Corp. reported earnings for the second quarter and first half of fiscal 2012. The Meats business showed encouraging progress in the second quarter, the company reported, as selective pricing actions were effective in reversing volume loss trends in key categories. After a volume decline of 5.7% in the first quarter, the second quarter showed a decline of 3.5%, with trends improving as the quarter progressed. Volume and share improvement in the company’s core meat categories was diluted by weak performance in bakery categories. A portion of the volume decline can be attributed to short-term disruption related to the transition of accounts to a third party broker. The long-term benefit of this strategic move is expected to greatly outweigh the near-term volume impact. Mix declined 0.4% in the first quarter but increased 1.0% in the second quarter.
In the second quarter, adjusted and reported net sales were flat versus the prior year period, as volume declines of 4.9% were offset by a positive mix effect of 1.5% as well as pricing. The North American Retail segment implemented selective strategic pricing actions in the second quarter in order to address competitive price gaps in certain categories. As a result, the company saw volume and share trends improve in core categories. The overall result was a quarter-over-quarter volume/mix improvement of 390 basis points (from -7.3% in the first quarter to -3.4% in the second quarter). Adjusted operating segment income increased 5% as a result of lower SG&A, operations productivity and lower MAP spend. Commodity price increases were not fully recovered in the quarter.