Cary McMillan, CFO at consumer goods company Sara Lee Corp., has been chosen as the new CEO of the company’s worldwide branded-apparel business. L.M. de Kool, a Netherlands-based senior vice president at Sara Lee, will take over as the new finance chief at the parent company.
Paul Lustig, the CEO of North American branded apparel, is leaving Sara Lee to “pursue other interests.” McMillan will assume immediate responsibility for the branded apparel business and will continue to report to company president and CEO, C. Steven McMillan. He will maintain his current responsibilities as CFO through year-end.
Cary McMillan joined Sara Lee in 1999 as chief financial and administrative officer. He began his career at Arthur Andersen in 1980 as a staff accountant, and became a partner in 1992. Six years later he became a managing partner in the audit firm’s Chicago office. As CEO, he will oversee Sara Lee’s apparel business, which includes brands such as Champion, L’eggs, and Wonderbra. With 2001 fiscal year revenues of $7.8 billion, branded apparel is the largest revenue producer at the company. “Cary McMillan has had a tremendous impact on our initiative to reshape Sara Lee,” said Steven McMillan in a statement, “and we are very pleased that we have the opportunity to focus his exceptional leadership skills on furthering the growth and development of our global branded-apparel business.”
De Kool began his career at Sara Lee in 1990 as VPof finance for the household and personal care division of Sara Lee/DE. In 1993, De Kool left Sara Lee/DE to serve as CFO of the Blokker retail chain. He rejoined Sara Lee/DE in 1995 as chief financial officer. Before joining Sara Lee, he held positions with Buhrmann Tertterode and CPC Benelux B.V.
De Kool will no doubt help oversee the ongoing rationalization of the company. Since Cary McMillan took over as company CEO, Sara Lee has undergone a substantial restructuring. Management has shed several noncore businesses, choosing to focus on three main areas: food and beverage, underwear, and household products. Coach, PYA/Monarch, and 17 other businesses have been or will be sold by Sara Lee.
In the first fiscal quarter of 2002, earnings at the food and consumer goods company dipped 5 percent to $242 million (30 cents per share), down from $254 million (29 cents per share) one year ago. Excluding one-time items, Sara Lee earned 26 cents per share in the quarter, matching analysts’ consensus estimates produced by Thomson Financial/First Call. While sales in Q1 rose to $4.52 billion, a 1.4 percent jump, operating income fell 11 percent, excluding divested businesses. Managers attributed the drop to higher raw-material costs in the company’s packaged meats business and an 11 percent increase in advertising expenses to support new products.
Late last month the Sara Lee board approved a 3.4 percent increase in the company’s common stock dividend rate. But management recently announced that second-quarter earnings will be lower than analysts expectations. What’s more, the company’s public float has not been a stellar performer of late. At the beginning of the year, Sara Lee common stock was trading around $25 per share. As of the market close on Friday, those shares were trading at $22.61.
Sara Lee generates approximately $20 billion in annual revenues. The company’s leading brands include Sara Lee, Hillshire Farm, Hanes, and Playtex.
Frederick Silny has landed the top finance position at clothing maker and retailer Guess Inc. He replaces Brian Fleming, who left Guess in November 2000.
Silny joins the company from CarsDirect.com Inc., a Culver City, Calif.-based automobile retailer, where he served as CFO since 1999. Prior to his position at CarsDirect, Silny was CFO at IHOP Corp., the parent company of the pancake restaurant chain. Silny was part of the group that took IHOP public in 1991. Between 1979 and 1989, Silny held a variety of financial and operational positions at Carnation Co., now a division of Nestle. He began his career as a certified public accountant with Coopers & Lybrand in 1976. Silny holds an M.B.A. from the University of Chicago, a master’s degree in statistics and psychology from the University of California at Berkeley, and a bachelor’s degree from McGill University.
Like other retailers, Guess has recently been hard hit by slumping sales. In Q3 sales were down to $95 million, an 8 percent drop from the same period the previous year. Third-quarter same-store sales declined 16 percent. In September same-store sales dropped by 18 percent from September 2000. Overall total retail sales for the month declined 11 percent.
The slump has led managers to revise third-quarter diluted earnings per share to between 6 and 8 cents, although they had been expecting a range of 9 to 11 cents per share. What’s more, an expected third-quarter charge of about $3 million for severance costs, asset write-downs, and acquisition costs has now been increased to between $4 million and $5 million. While managers blame the events of September 11 for the slowdown in both its wholesale and retail sales, conditions began to deteriorate as early as August, when the company saw a 9 percent slide in same-store sales.
Managers at Northville, Mich.-based Hayes Lemmerz International Inc. named Kenneth Hiltz chief financial officer on an interim basis. Hiltz replaces William Shovers, who will remain with the company until a permanent replacement is found. Hiltz is a former principal of turnaround specialist Jay Alix & Associates and has held senior executive positions at a number of Fortune 1000 companies. Hiltz holds a B.S. in business administration from Xavier University in Cincinnati and an M.B.A. from the University of Detroit. He is also a C.P.A.
Given the turmoil Hayes Lemmerz has been through of late, the shake- up at the financial helm comes as no big surprise. The auto-parts supplier delayed announcement of its second-quarter results in September after restating its fiscal 2000 and first-quarter results of 2001 to correct accounting errors. The company also wrote down the value of some impaired assets at a manufacturing facility. Management estimated that the $41.8 million ($1.41 per share) net loss recorded in 2000 would increase by at least $14 million (50 cents per share) as a result of the correction. In addition, the previously reported first-quarter 2001 loss of $7.6 million would increase by at least $27 million, a sizable hit.
Shortly after the earnings restatements were announced, Hayes Lemmerz was slapped with a slew of related class action lawsuits. Those events were followed by the resignation of chairman Ranko Cucuz, who was replaced in August by Curtis Clawson, the current president and CEO.
And if things weren’t bad enough at the company, last week officials laid off 145 employees, or 11 percent of the North American workforce, as part of an accelerated cost- reduction initiative. The company’s North American wheels operations were also combined into a single unit. That might be just the tip of the iceberg. “The company will continue to evaluate additional cost- reduction initiatives,” said CEO Clawson in a statement.