Chicago-based Sara Lee Corporation, one of the world's leading branded consumer packaged goods companies, said yesterday [Tuesday] that its exposure for receivables due from Kmart is "immaterial".

As noted in the company's second quarter 10-Q filed with the Securities and Exchange Commission yesterday, Kmart owed Sara Lee US$40m when it filed for bankruptcy, however, Sara Lee also stated that it entered into financial contracts prior to Kmart's bankruptcy, leaving Sara Lee with no material receivables exposure.

C. Steven McMillan, chairman, president and CEO of Sara Lee Corp, said: "While Kmart is a large, important and valued customer for Sara Lee Corp, I want to assure our investors that Sara Lee's receivables exposure with Kmart will not affect our third quarter results.

"As Kmart's financial issues became increasingly apparent over the last several months, Sara Lee implemented a number of procedures such as carefully monitoring shipments and using various financial mechanisms to lessen any impact from the Kmart bankruptcy."

Kmart was Sara Lee's fifth largest customer in fiscal 2001. Sara Lee's Intimates and Underwear business generated substantially all of these sales as the company's Food and Beverage and Household Products businesses sell their products to a third-party distributor, Fleming Corporation, which in turn resells these products to Kmart. Sara Lee resumed shipping its products to Kmart last week.

McMillan added: "We are confident that Kmart's bankruptcy will place them in a more competitive position within the retail industry over the longer term. We look forward to working with Kmart as they emerge as a stronger retailer, which, in turn, means Kmart also will be a stronger customer.

"In terms of the impact from store closures, we believe that for the basic products we sell - such as underwear, socks and bras -if consumers no longer have a local Kmart in which to shop, they will still be able find what they are looking for at one of our other major customers."