NEW YORK – Despite a decline in sales, Sara Lee Corp. on Thursday posted second-quarter earnings that jumped 34.4 percent while its branded apparel business showed a gain in operating income of 10 percent.
For the three months ended Dec. 31, net income was $438 million, or 25 cents, versus $326 million, or 39 cents, in the same year-ago quarter. Sales declined by 1.4 percent to $4.45 billion from $4.51 billion. The U.K. branded apparel private label division was reported as a discontinued operation during the quarter.
The company said that its branded apparel business – a portfolio of outerwear, innerwear and hosiery categories sold primarily in the Americas and Asia – is currently preparing to be spun off from Sara Lee between June and September 2006 under the new corporate name Hanesbrands Inc.
For the quarter, the branded apparel business posted net sales of $1.18 billion, down 5 percent compared with a year ago. Sales decreased in part by overall volume declines of 3 percent primarily due to planned exits of certain low-margin fleece and sleepwear businesses and continued weakness in the hosiery category. Operating income for the business segment, however, rose 10 percent to $169 million from $154 million, with improved inventory management, lower expenses and favorable cotton costs offsetting the effects of fewer unit volumes.
For the six months, net income for Sara Lee fell by 25.6 percent to $505 million, or 56 cents a diluted share, from $678 million, or 82 cents, a year ago. Sales dropped 1.4 percent to $8.64 billion from $8.76 billion.