Sara Lee has revealed plans to invest in its North American Bakery business, quashing rumours that it was looking to sell the struggling division.

During an analyst day yesterday (14 September), CJ Fraleigh, CEO of Sara Lee’s North American retail and foodservice business, said the company began “additional investment” in bakery during the fourth quarter of the company’s last fiscal year. Fraleigh said Sara Lee had invested in marketing, people and aligning prices to make the business more competitive.

Fraleigh said that spending had continued, with “significant investment” in the first quarter of this year.

The Sara Lee executive also said the company is focused on SKU reduction and simplifying prices at the same time as innovating and increasing levels of automation in production.

There are opportunities for Sara Lee to improve the margins of its North American bakery business, Fraleigh said, with its rivals posting margins of -2% to beyond 10% compared to its 2.9% margin.

The company said, for instance, that major rivals Flowers Foods and Bimbo Bakeries USA have 8.9% and 8.5% margins, respectively.

The announcements will pour cold water over reports that Sara Lee has appointed advisers to study the options for its North American bakery division, which has been described as the “Achilles heel” of the business.