Sara Lee Names Spinoff Meat Unit Hillshire Brands

Sara Lee will become two independent pure-play, publicly-traded companies on June 28, 2012. D.E MASTER BLENDERS 1753 will focus on international coffee and tea and Hillshire Brands will focus on meat-centric food products and foodservice operations.

6 Jun 2012 --- Sara Lee Corp. has announced that it chose Hillshire Brands Company as the new name for its North American business. Hillshire Brands will be listed on the New York Stock Exchange under the ticker symbol “HSH.”

Sara Lee will become two independent pure-play, publicly-traded companies on June 28, 2012. D.E MASTER BLENDERS 1753 will focus on international coffee and tea and Hillshire Brands will focus on meat-centric food products and foodservice operations. Hillshire Brands will include several popular, market-leading consumer brands including Jimmy Dean, Hillshire Farm, Ball Park, Aidells, Gallo Salame and State Fair.

“As a pure-play company with strong momentum, we needed a name and identity that captures the potential of this new organization,” said Sean Connolly, chief executive officer of Sara Lee North American Retail and Foodservice, who will become chief executive officer of Hillshire Brands. “Hillshire Brands represents our strong heritage in quality and great taste, as well as our ambitions for growing our portfolio of iconic brands in the future.”

The Hillshire name was inspired by the Hillshire Farm brand, which Sara Lee acquired in 1971. Friedrich (Fritz) Bernegger founded Hillshire Farm in New London, Wis., and his entrepreneurial spirit lives on in the company to this day.

“A key goal was to retain the strong equity with consumers and customers that the Hillshire name brings us,” added Connolly. “’Hillshire’ is a name that stands for quality, integrity and superior taste.”

After the spin-off, Hillshire Brands’ Foodservice division will continue to be known as “Sara Lee Foodservice.” This brand name is well-known and respected throughout the industry for its full portfolio of meat and bakery items, including both front-of-the-house and back-of-the house brands.

The company has also adopted a new visual identity to help position Hillshire Brands as a leader focused on providing innovative meat-centric brand and snack solutions, but at the same time, create a distinction between the new corporate name and the leading Hillshire Farm brand. The identity will be instilled throughout the organization through signage, stationery and a branded office space currently under construction in Chicago.

To assist in crafting a brand image that accurately reflects its new strategic direction and name, the company engaged branding firm Duffy & Partners. “Having worked with many of the company’s iconic brands throughout the years, this was a particularly exciting assignment,” said Joe Duffy, creative director of Duffy & Partners. “It was an opportunity to deliver a powerfully unique design solution that reflects Hillshire Brands’ desire to provide millions of consumers’ delicious convenient meat-centric foods.”

Sara Lee Corp. also revealed its strategy for its North American foods business, Hillshire Brands Company, which emphasized new product development, marketing investment and disciplined cost control. Management expects its strategy to deliver annual revenue growth of 4-5 percent and an operating margin of 10 percent by fiscal year 2015 and have a near-term dividend payout ratio of 30-35 percent. The new name of the company, announced earlier today, will become effective after the June 28, 2012 spin-off to shareholders of its international coffee and tea business.

“We envision making Hillshire Brands Company the most innovative meat-centric food company in the U.S.,” said Sean Connolly, chief executive officer of Sara Lee Corp.’s North American Retail and Foodservice business, who becomes Hillshire Brands Company’s CEO after the spin-off. “We begin life in a dynamic sector as a major player with four iconic mainstream meat brands – Jimmy Dean, Ball Park, Hillshire Farm and State Fair – and our two artisanal brands – Aidells and Gallo. They position us well and provide tangible opportunity for growth in value-added products.

“We intend to produce robust shareholder return by strengthening our core brands and expanding into adjacent food categories,” Connolly added. “With a relentless focus on consumer needs, we will leverage our marketing discipline and our market insights to develop inventive new products, while financing our innovation and increased marketing investment through enhanced margins and operational efficiencies.”

During the day, Connolly and Maria Henry, chief financial officer of Sara Lee Corp. North American Retail and Foodservice, who becomes Hillshire Brands’ chief financial officer after the spin-off, outlined Hillshire Brands’ four drivers of profitability:

• Higher revenues through innovation and increased brand support
• Improved gross margins through new, higher-margin products, brand strength differentiation, and productivity
• Increase marketing, advertising, and promotion (MAP) to five percent of revenue by fiscal year 2015 and make it more-effective
• Further cost and productivity programs including a three-year plan to save $100 million and investment in insights and innovation to manage selling, general and administrative (SG&A) expenses
“Hillshire Brands starts its existence with a strong, investment-grade financial position and a track record of solid performance,” said Henry. “Achieving our fiscal year 2015 revenue growth and operating margin targets will create real incremental value in our company.”