My assessment of Sara Lee’s Financials from 2008-2010 are as follows:
-Overall, the company’s net sales have decreased, but this is reasonable due to loss of revenues from operations of those businesses divested.
-In terms of net sales solely from business that have continued to operate, 2008 -2010 showed an increase in net sales over the two prior years, however slight decline in net sales occurred from 2008 to 2009 and from 2009 to 2010.
-While this decline in net sales from continued operations is somewhat of a concern, Sara Lee was able to significantly improve both their operating and net income each year from 2008 through 2010.
-Sara Lee has decreased their total debt carried on the Balance Sheet from year to year.
– The companies net cash flow from operating activities have significantly increased since 2008.
In my opinion, the company seems to be in good financial position after divesting business not believed to be a significant part of their strategic operating segments. They continue to improve their net income and they have many brands within their business units that have gained market share.
Each of Sara Lee’s business units have their own competitive strengths that help them compete and/or out perform competitors. One business unit in particular that has many strengths is the North American Retail unit.
The competitive strengths of their North American Retail segments includes:
-High market shares
-Market Leading Brands
This business unit sold processed food brands to retail stores. 10 of the 12 main product lines were able to increase their market share. This is one positive result that came from their retrenchment plan.
Sara Lee’s Corporate Strategy before their retrenchment initiatives involved acquiring various businesses in the food processing, packaging, and distribution industries. Operating with multiple businesses in several markets would help them grow in their various markets and create competitive advantages by utilizing specific techniques and knowledge gained from their acquisitions, thus providing opportunities for greater synergies within Sara Lee’s processing, packaging, and distribution operations. However, some of their acquisitions did not fit the mold president and COO Barnes believed to be strategic for the future of the company. For this reason Sara Lee announced it would divest certain businesses not viewed as strategic and instead focus on increasing market share and profitability in strategic business units pertaining to their value chain and geographic reach. After the retrenchment initiatives, Sara Lee’s business segments narrowed to:
-North American Retail
-North American Fresh Bakery
-North American Foodservice
-International Household & Body Care (Until 2010 when this segment was also divested)
Due to the retrenchment initiatives, Sara Lee was able to focus on these business segments, eliminating the time and effort spent in building sales in small, more diverse businesses.