Sara Lee Achieves Broad Based Growth

08/11/06 Sara Lee Corporation has announced that net sales for the first quarter of fiscal 2007, ending Sept. 30, 2006, were $2.9 billion, an increase of 5% compared to $2.8 billion in the prior year’s first quarter. Net sales grew in all business segments, the first time in two years, with particularly strong top-line performance in North American retail bakery (+8%) and international beverage (+8%).

The consolidated unit volumes for the corporation increased 3% during the first quarter of fiscal 2007, as unit volume growth was reported in all business segments except North American retail bakery, where stock-keeping unit (SKU) rationalization and planned exits from unbranded business negatively impacted volumes.

Sara Lee’s operating segment income increased 29% in the first quarter to $235 million, reflecting double-digit increases in all business segments except household and body care, which faced a difficult comparison with a significant gain on the sale of the sun care business reported in last year’s first quarter.

“Sara Lee’s first quarter of fiscal 2007 demonstrated the continuing progress that we have made in each line of business,” said Brenda C. Barnes, chairman and chief executive officer of Sara Lee Corporation. “A strong array of new products and improved execution across the company delivered sales growth in every business and higher operating segment income in five of our six business segments.

“While the first quarter was operationally quite strong, some of the benefit came from the timing of various investments, including incremental MAP, which will be spent later in the year. We still expect to realize improved performance in future quarters, though we will likely see some of the benefits of our stronger business tempered by necessary, productive investments. I am confident that we are well positioned to deliver all of our financial commitments this fiscal year,” concluded Barnes.

Total media advertising and promotion (MAP) spending for continuing operations decreased 5% in the first quarter, primarily because of a change in timing as various media advertising campaigns that were initially planned for the first quarter of fiscal 2007 are now expected to be executed later in the fiscal year. The company still anticipates MAP spending to increase in fiscal 2007.

On Sept. 5, 2006, Sara Lee successfully completed the tax-free spin-off to its shareholders of Hanesbrands Inc. After the close of business that day, 100% of the common stock of the branded apparel business was distributed to Sara Lee shareholders of record, as of Aug. 18, 2006. Sara Lee distributed to its shareholders one share of Hanesbrands stock for every eight Sara Lee shares owned. On Sept. 6, 2006, Hanesbrands started trading on the New York Stock Exchange under the “HBI” ticker symbol. In connection with the spin-off, Sara Lee received a one-time payment of $2.4 billion from Hanesbrands.