TEXT OF STORY
Kai Ryssdal: Among the many other things that happen when an economy starts to recover, is that companies go on buying sprees. That’s actually one of the ways to tell things are getting better somehow.
But today’s corporate story is about a break-up. Sara Lee is divorcing itself. It’s going to split into two public companies: one to sell in the U.S., the other to sell overseas. Marketplace’s Jennifer Collins reports on how an outfit best known for its humble cheesecake bit off way more than it could chew.
Jennifer Collins: Lisa Bradner remembers buying Sara Lee’s desserts as a kid in Chicago. She even remembers the slogan.
Lisa Bradner: Oh everybody doesn’t like something…
Sara Lee jingle: But nobody doesn’t like Sara Lee.
Actually, that’s not be so true anymore, says Bradner, president of marketing firm Geomentum.
Bradner: We’re joking about me pulling out jingles from the ’70s, but they really haven’t put a lot of money into consumer marketing for many, many years.
The company did put a lot of money into buying up brands. Erin Swason is a Morningstar analyst.
Swanson: If you think of where Sara Lee was 10, 15 years ago, it owned the Coach brand. It owned Hanes brand.
It also owned Kiwi shoe polish, Ambi Pur Air Freshener and Champion sweatshirts. Lisa Bradner says that kind of diversification doesn’t work anymore.
Bradner: You’re mixing dessert topping and floor wax. It’s very, very difficult to really get the nuances of the different businesses.
Sara Lee sold off the handbags and shoe polish. And then it tried unsuccessfully to find a buyer for itself. The split announced today will create one company that sells coffee overseas and another that sells desserts and brands like Ball Park Franks in the U.S.
Mick Swartz is a finance professor at the University of Southern California.
Mick Swartz: People are seriously looking at a conglomerate and saying we have to stick to our core businesses.
Swartz says Sara Lee is still looking to be acquired; splitting into two companies will make that easier.
I’m Jennifer Collins for Marketplace.
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