SARA LEE REPORTS A REBOUND IN DELI SALES

NANCY BRUMBACK

CHICAGO (FNS) -- Sara Lee Corp.'s recall of hot dogs and packaged deli meats following a listeria outbreak last December cost the company $76 million, but the affected brands have regained most of their pre-recall market share, company executives told shareholders at the annual meeting here.

That $76 million, noted Judith A. Sprieser, executive vice president and chief financial officer, amounted to five cents a share, and did not include the impact of lost sales and profits.

John H. Bryan, chairman and chief executive officer, said at a press conference following the meeting on Oct. 28 that the market share for Ball Park brand hot dogs, manufactured at the affected Michigan plant and at other plants, is above its level before the recall.

Sara Lee deli meats were more seriously affected, since they are produced only at the Bil Mar plant that was closed, "so we went out of business" for a while, Bryan said.

The company is currently rebuilding its capacity in deli meats. "We are back into about 80% of the retail accounts and in nine of our top 10 accounts," he said.

Retail sales for deli meats are about 80% of pre-recall levels, he added, while food-service sales have not rebounded as much. At the meeting, Steven McMillan, president and chief operating officer, pointed out the Bil Mar plant was never conclusively linked to the listeria outbreak but that Sara Lee voluntarily closed the plant and cooperated with food-safety authorities in their investigation. He thanked the company's trade customers, consumers and employees for their cooperation in this situation.

The recall "energized Sara Lee to lead the industry in food-safety research and education," he said, noting that Sara Lee has spent about $100 million to develop and implement an extensive food-safety program across its operations.

Asked if he supported efforts to develop a single federal food-safety agency, Bryan opted to "reserve opinion" until he had studied the issue further. "It's not obvious to me what's wrong with it, but it would have to be a pretty big agency."

Also at the meeting, McMillan noted the packaged meat division's new products, particularly Ball Park Singles and Hillshire Farms' Lean & Hearty line, have done well with consumers. In its bakery division, Sara Lee is test marketing a line of frozen Calzone Creations under the Sara Lee brand.

Bryan also said the company is in an expansion mode, "pursuing acquisitions with a renewed focus," looking for complementary companies.