US food and clothing giant Sara Lee has reported a 25% fall in quarterly earnings, hurt by higher raw material costs and the weak foodservice market.

The Chicago-based company reported earnings of US$230m, or 29 cents a share, for its fiscal first quarter to 27 September, compared to $308m, or 38 cents a share, for the year-ago period. In July Sara Lee forecast first-quarter earnings of 23 to 28 cents a share, prompting analysts to lower their forecasts to an average of 26 cents a share, reported Reuters.

Sara Lee said it expects some challenging conditions, including higher costs for meat and weakness in the foodservice market, to continue into the second quarter.

First-quarter sales increased almost 3% to $4.67bn, while shipment volumes fell 3%.