Hillshire Brands replaces Sara Lee name in spinoff
BY FRANCINE KNOWLES Business Reporter June 5, 2012 9:30AM
Updated: July 7, 2012 8:40AM
When the Sara Lee corporate name disappears, it will be replaced by Hillshire Brands Co., the new name of the company’s meats business, Sara Lee announced Tuesday.
Sara Lee, which is splitting into two independent publicly traded companies late this month, said Hillshire Brands Co. will encompass brands including Jimmy Dean, Hillshire Farm and Ball Park as well as its Sara Lee desserts.
The other company, D.E. Master Blenders 1753, will focus on international coffee and tea.
After the spin-off, Hillshire Brands’ Foodservice division will continue to be known as Sara Lee Foodservice, the company said.
In revealing the new corporate name, the company said Hillshire Brands will be listed on the New York Stock Exchange and trade under the ticker symbol “HSH.” The company also unveiled a new logo.
The Hillshire name was inspired by the Hillshire Farm brand, which Sara Lee acquired in 1971.
“Sara Lee is embracing one of their well-known product brands,” said Tim Calkins, clinical professor of marketing at Northwestern University’s Kellogg School of Management. “That makes a lot of sense because they’re building on a brand that’s already in the market and already has awareness and positive perception. I think overall it’s a very smart move because the Sara Lee name is clearly not a good fit for the new meat company.”
Launching a totally new name would have been very expensive and difficult for the company, Calkins added.
The company needed “a name and identity that captures the potential of this new organization,” Sean Connolly, chief executive officer of Sara Lee North American Retail and Food Service, said in a statement. Connolly will become CEO of Hillshire Brands.
The company laid out its strategy for the business at an investor meeting in New York on Tuesday. It said among key drivers of profitability will be higher revenues through innovation and greater brand support, increased marketing and advertising and a three-year plan to save $100 million and invest in innovation to manage selling and general and administrative expenses.
The company expects its strategy to deliver annual revenue growth of 4 percent to 5 percent and an operating margin of 10 percent by fiscal year 2015.
The new name is important, said Calkins, who noted Sara Lee has had a lot of ups and downs over the years. The company has been shrinking for the past 10 years. It spun off its Coach handbag division in 2001 and its apparel and underwear business in 2006. It also sold off its bakery, body-care and insecticides businesses.
The Hillshire Brands name will become effective after the June 28 spin-off of the coffee and tea business.
“Names play a very symbolic role for organizations,” Calkins said. “This change sends a signal to the organization that it’s not business as usual, but instead it’s a fresh start.”