Sara Lee (NYSE:SLE) has an extensive business in North America and the company is making investments to grow earnings from here over the next few years. Sara Lee's largest base of business is in North America where the company operates in three segments, with total adjusted sales of $6.7 billion in fiscal 2010, which ended June 30. The company reported a non-GAAP adjustment of its sales in fiscal 2010 to exclude an extra week in the year.

IN PICTURES: 5 "New" Rules For Safe Investing

North American Retail
North American retail is the largest part of the company's business in North America with fiscal 2010 sales of $2.8 billion. This segment includes brands like Hillshire Farm, Jimmy Dean and Ball Park Franks.

Sara Lee has increased its operating income by 85% in this business over three years, from $183 million in fiscal 2008 to $338 million in fiscal 2010. The company's strategy is to concentrate in large and growing categories where branding is very important to customers.

Sara Lee has made or is planning to make investments to improve its profitability in North American retail. These investments include updates to the company's plant in Missouri and the adoption of new technology to automate business planning and other tasks.

Fresh Bakery
North American Fresh Bakery is the second largest part of Sara Lee's business in North America, with $2.1 billion in sales in fiscal 2010. The company owns 41 bakeries across the United States and distributes on more than 4,000 routes in its service area.

Operating income for North American Fresh Bakery has been flat for several years and was $60 million in fiscal 2010. The company is determined to improve this business going forward and increase its operating margin from the 2.9% reported in fiscal 2010. Flower Foods (NYSE:FLO) reported margins of 8.9% in its bakery business so there is significant upside for Sara Lee here if the company is successful. Sara Lee plans to focus on restructuring the company's route system and other investments to improve its operations.

North American Food Service reported $1.8 billion in sales in fiscal 2010. Sara Lee has increased operating income by 35% in North American Food Service over the previous two years, from $110 million in fiscal 2008 to $149 million in fiscal 2010. (For a personal finance look at food, check out 22 Ways To Fight Rising Food Prices.)

Sara Lee is working to improve its supply chain in the retail and foodservice businesses, as this will lead to higher returns on capital and lower costs. The company plans to spend $130 million at a facility in Kansas City, which will lead to a doubling of capacity and a 50% reduction in processing time.

Bottom Line
Another company in the food business in North America include ConAgra Foods (NYSE:CAG), which owns the Chef Boyardee and Hebrew National brands. General Mills (NYSE:GIS) is also a large competitor in North America with dozens of brands ranging from Betty Crocker to Hamburger Helper.

North America is an important part of Sara Lee and the company is making investments here over the next few years to improve efficiency, cut costs and boost profits.

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free

Related Articles
  1. Stock Analysis

    3 Stocks that Are Top Bets for Retirement

    These three stocks are resilient, fundamentally sound and also pay generous dividends.
  2. Investing News

    Are Stocks Cheap Now? Nope. And Here's Why

    Are stocks cheap right now? Be wary of those who are telling you what you want to hear. Here's why.
  3. Investing News

    4 Value Stocks Worth Your Immediate Attention

    Here are four stocks that offer good value and will likely outperform the majority of stocks throughout the broader market over the next several years.
  4. Investing News

    These 3 High-Quality Stocks Are Dividend Royalty

    Here are three resilient, dividend-paying companies that may mitigate some worry in an uncertain investing environment.
  5. Stock Analysis

    An Auto Stock Alternative to Ford and GM

    If you're not sure where Ford and General Motors are going, you might want to look at this auto investment option instead.
  6. Mutual Funds & ETFs

    The 4 Best Buy-and-Hold ETFs

    Explore detailed analyses of the top buy-and-hold exchange traded funds, and learn about their characteristics, statistics and suitability.
  7. Stock Analysis

    The Biggest Risks of Investing in Netflix Stock

    Examine the current state of Netflix Inc., and learn about three of the major fundamental risks that the company is currently facing.
  8. Stock Analysis

    What Seagate Gains by Acquiring Dot Hill Systems

    Examine the Seagate acquisition of Dot Hill Systems, and learn what Seagate is looking to gain by acquiring Dot Hill's software technology.
  9. Mutual Funds & ETFs

    What Exactly Are Arbitrage Mutual Funds?

    Learn about arbitrage funds and how this type of investment generates profits by taking advantage of price differentials between the cash and futures markets.
  10. Investing News

    Ferrari’s IPO: Ready to Roll or Poor Timing?

    Will Ferrari's shares move fast off the line only to sputter later?
  1. How do I read and analyze an income statement?

    The income statement, also known as the profit and loss (P&L) statement, is the financial statement that depicts the ... Read Full Answer >>
  2. Can working capital be too high?

    A company's working capital ratio can be too high in the sense that an excessively high ratio is generally considered an ... Read Full Answer >>
  3. How do I use discounted cash flow (DCF) to value stock?

    Discounted cash flow (DCF) analysis can be a very helpful tool for analysts and investors in equity valuation. It provides ... Read Full Answer >>
  4. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  5. What is the formula for calculating compound annual growth rate (CAGR) in Excel?

    The compound annual growth rate, or CAGR for short, measures the return on an investment over a certain period of time. Below ... Read Full Answer >>
  6. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>

You May Also Like

Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!