DOWNERS GROVE, Ill. ( TheStreet) -- Sara Lee ( SLE) returned to year-over-year profitability but cuts its full-year outlook as it works on selling off its international bakery and North American refrigerated dough businesses.

Sara Lee shares were 0.7% higher at $19.28 ahead of midday Thursday, off earlier highs, after the food producer cut its 2011 profit guidance on competition in its international bakery business and volume pressures.

Sara Lee now expects to earn between 79 cents and 83 cents per share this fiscal year, cutting the range by 6 cents. Analysts had called for a full-year profit of 86 cents per share.

In the recent quarter, Sara Lee earned $153 million, or 25 cents per share, compared with a year-earlier loss of $336 million, or 49 cents loss per share. Adjusted for one-time items, earnings last quarter were 24 cents per share, up from 22 cents a year earlier, but lower than the 25 cents per share Wall Street had been looking for.

Quarterly revenue rose 7% to $2.22 billion, just shy of the $2.23 billion analysts had expected.


Sara Lee said it was considering selling its international bakery and North American refrigerated dough businesses. It has already sold off a number of its business segments and Sara Lee said in January it would split itself into two separate companies following unsatisfactory takeover bids.

Sara Lee intends to spin off its North American retail and food service business, a company that will trade publicly and retain the Sara Lee name. That business includes brands such as Hillshire Farm lunch meat, Ball Park hot dogs and Jimmy Dean sausages. The other company, Sara Lee's remaining international bakery and beverages businesses, which includes Douwe Egberts and L'Or brands, was as yet unnamed but referred to as CoffeeCo and could be based overseas.

Sara Lee

Sara Lee said it is on track with the split, expected to be complete in 2012.

On Wednesday Sara Lee completed the sale of its global shoe care business, in a majority of countries, to SC Johnson for 245 million euros ($364 million).

The sale of its North American fresh bakery business should close by the end of this fiscal year, Sara Lee said. It insecticides business sale is expected to close in the second half of 2011.

Sara Lee also said it acquired Aidells Sausage for $87 million in cash during the recent quarter in an effort to boost its meat business in North America and expand its footprint into the market of organic and natural meats.


As are most companies, Sara Lee said higher commodity prices for a range of ingredients including coffee, meat and wheat, have pressured its results in recent quarters, and it has passed on those higher costs to its consumers for most of its products.

Companies including Hershey ( HSY), J.M. Smucker ( SJM), Starbucks ( SBUX), McCormick ( MKC), ConAgra Foods ( CAG), Kellogg ( K) and Coca-Cola ( KO) have all said their financial results were impacted by higher commodity costs, and implemented price increases to help offset those costs.

-- Written by Miriam Marcus Reimer in New York.

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