Sara Lee Corp. said Tuesday that third-quarter net income fell 50 percent because of special charges and surging commodity costs.
The Chicago-based company also said its fourth-quarter and full-year fiscal 2005 results will be lower than expected, as it continues working on a massive restructuring that will include the spinoff of its U.S. apparel division within two years. Sara Lee said it believes operating income will be $1.44 to $1.46 a share, compared with its previously announced range of $1.46 to $1.56 a share.
The announcement sent the company’s shares skidding. Sara Lee stock dropped as much as 6 percent before closing at $21.33, down 53 cents, on the New York Stock Exchange.
Net income for the quarter fell to $189 million, or 24 cents a share, from $376 million, or 47 cents a share, in the same period a year ago. Sales edged up to $4.78 billion from $4.74 billion. Excluding special items, Sara Lee earned 29 cents a share, falling 2 cents a share short of estimates, according to Thomson First Call.
Brenda Barnes, who was named chief executive in February, said the results are “not what we want them to be.”
Analysts reacted negatively to the results.
“We fear that trends will get incrementally worse over the next year or so,” said Evan Morris, a retail analyst with Bank of America Securities. “We think it would be naive to expect that this organization will not become very distracted by all the heavy lifting it will need to do.”
The restructuring includes selling its European clothing and meats units, U.S. retail coffee unit and a direct sales group that markets cosmetics, household products and other products in Australia, Japan, Mexico and the Philippines.
In other earnings news:
– Wm. Wrigley Jr. Co. said first-quarter profit jumped 18 percent, helped by increased shipments and its acquisition of Spanish candymaker Joyco. The Chicago-based company earned $131 million, or 58 cents a share, surpassing estimates by 5 cents a share. A year ago, Wrigley earned $111 million, or 49 cents a share.
Revenue grew 17 percent, to $950.4 million. Sales in Europe, the Middle East and Africa surged 16 percent; North American sales increased 7 percent; U.S. sales rose 5 percent; and sales in Asia climbed 39 percent.
Wrigley said Joyco, which it bought in the second quarter of 2004, contributed about 6 percent of the revenue gain, and favorable exchange rates added about 3 percent. Shipments increased 17 percent worldwide.
Shares of Wrigley added $3.09, to $67.57, in NYSE trading.
– Brunswick Corp., benefiting from an accelerating rebound in the market for recreational boats and engines, as well as a hefty one-time gain from the sale of an investment, reported solidly higher first-quarter results.
The Lake Forest-based company said net income rose 97 percent, to $94.6 million, or 96 cents a diluted share, from the year-earlier quarter’s $48 million, or 50 cents a share. But that bottom-line figure was swelled by a pretax gain of $38.7 million from Brunswick’s sale of its holding in another company.
Excluding a one-time gain, Brunswick earned 64 cents a share. Analysts were expecting 60 cents a share.
Sales climbed 17 percent, to $1.4 billion. Profit increased 22 percent at the marine-engine group and 55 percent at Brunswick’s boat segment.
Shares of Brunswick fell $1.75, to $41.90, in NYSE trading.
– Equity Residential said first-quarter earnings more than doubled on gains from property sales and the divestiture of a business to eBay Inc.
The Chicago-based real estate investment trust posted net income of $214 million, or 74 cents a share, up from $93.8 million, or 35 cents a share, a year earlier. Revenue climbed 11 percent, to $488.5 million.
Funds from operations, a measure of cash flow used by REITs, rose to 74 cents a share from 52 cents a share. On that basis, results easily beat estimates of 57 cents a share.
Shares of Equity Residential added 8 cents, to $33.47, in NYSE trading.
– Smurfit-Stone Container Corp. said its first-quarter loss narrowed to $19 million, or 7 cents a share, from a loss of $66 million, or 26 cents a share, in the year-ago period. Analysts were expecting a loss of 6 cents a share for the period.
Sales rose to $2.09 billion from $1.94 billion in the first quarter, typically the Chicago-based company’s slowest.
Shares of Smurfit-Stone shed 33 cents, to $12.97, on the Nasdaq stock market.
– USG Corp. said first-quarter earnings surged 35 percent on a 15 percent increase in sales. Net income at the Chicago-based maker of building products was $77 million, or $1.77 a diluted share, up from $57 million, or $1.33 a share, a year ago. Sales were a first-quarter record $1.17 billion.
USG has been helped by strengthening prices for wallboard. Until recently, new production capacity that came on line a few years ago had suppressed prices for the product, which is used in the construction of homes and commercial buildings. But now that capacity largely has been absorbed.
USG stock lost 70 cents, to $41.21, in NYSE trading.
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jschmeltzer@tribune.com
