Sara Lee shares tumble on lowered 2009 outlook

MILWAUKEE - Shares of Sara Lee Corp. tumbled Wednesday after the company lowered its outlook for the rest of the year because of a stronger dollar and more shares outstanding.

Shares fell $1.26, or 11 percent, to $10.60 in morning trading.

The maker of Ball Park hot dogs and Sara Lee breads said its lowered guidance did not mean business was deteriorating. Instead it said it was because the dollar has been gaining strength — which hurts the company because it has a large presence overseas. The company is also suspending its buyback program, which means it will have more shares outstanding and therefore lower earnings per share.

The company said its fiscal first-quarter profit rose 15 percent as it raised prices to help offset rising commodity costs and benefited from a then-weaker dollar.

Goldman Sachs analyst Judy Hong wrote in a research note that volatility in the stock should taper off.

"We believe the stock could see a relatively muted reaction once investors sort through a noisy quarter," she wrote in a note.

She said operating income from the company's North American retail and foodservice business beat her estimates, but the North American bakery business and international household and body care products were below her forecasts.

She said analysts could push their earnings per share estimates downward but noted the company's operating performance was in line and the guidance drop was being driven by currency issues and the higher share count.

The company expects earnings per share to fall in a range of 99 cents to $1.06 a share in fiscal 2009, down from previous guidance of a range of $1.12 to $1.20. Those figures include a 21 cent a share gain due to the sale of the company's tobacco business, which was realized in the first quarter.

Analysts, who typically exclude one-time items, are predicting earnings per share of 96 cents in fiscal 2009, according to Thomson Reuters.

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