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Sara Lee Unveils Transformation Plan that Focuses on Food

CHICAGO -- Sara Lee Corp. here said yesterday it was implementing a comprehensive transformation plan designed to better position the company for long-term growth, which includes focusing tightly on its food, beverage, and household products, and divesting certain businesses. Also, as part of the plan, Brenda C. Barnes was elected c.e.o., effective immediately. She replaces Steve McMillan, who will remain chairman until October.

Sara Lee will reorganize its business operations around distinct consumers, customers, and geographic markets to increase strategic focus and simplify its organization.

--North American Retail will include the bakery, packaged meats, and Senseo coffee retail businesses in North America. C.J. Fraleigh will lead this business, which represents $4.5 billion in sales.

--North American Foodservice will include the bakery, coffee, and meats foodservice businesses in North America. James Nolan, who is currently e.v.p. of U.S. operations for PepsiAmericas Inc., will join Sara Lee Feb. 21 to lead what will be a $2.2 billion business. The U.S. retail coffee operation (excluding Senseo) will report to this line of business while it is being studied for divestiture.

--Sara Lee International will include the bakery and beverage businesses outside of North America and the global household products business, as well as the European packaged meats business while that business is being reviewed for divestiture. Adriaan Nühn, who currently is responsible for the global beverage and household products lines of business, will lead Sara Lee International, which will represent $4.6 billion in sales.

Sara Lee said the new reporting structure is effective July 3, 2005, which is the beginning of the company's 2006 fiscal year.

In addition, Sara Lee is planning to locate its North American businesses with its corporate staff at a single site to be determined in the Chicago area. Sara Lee International will be headquartered in Utrecht, the Netherlands.

In line with its new organization, the company will make some dramatic changes to its portfolio. Last month Sara Lee announced that it was formally exploring the sale of its $1.8 billion European apparel business. With yesterday's announcement, the company also is pursuing the spinoff of the balance of its apparel business, Branded Apparel, Americas/Asia, into an independent, publicly traded company.

Sara Lee also plans to sell the following businesses: Meats Europe, Direct Selling, and U.S. Retail Coffee, which includes regional retail coffee brands Chock full o'Nuts, Hills Bros, MJB, and Chase & Sanborn. The Retail Coffee divestiture will not include the Senseo brand, Sara Lee said.

These three divestitures, combined with the Branded Apparel spinoff and the sale of European Apparel, represent $8.2 billion in sales, approximately 40 percent of the company's annual revenues.
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