Chicago-based Sara Lee said Tuesday (8 August) that net sales for fiscal 2006 were US$15.9bn, a decrease of 1% from 2005’s result. For the fourth quarter, net sales were $4.1bn, up 2% from the comparable period of last year. The results lead the company to concede that its $672m year-long restructuring programme will not produce the 12% profit margin by 2010 that chairman and chief executive Brenda Barnes had promised.

Diluted EPS for FY2006 was $0.72, down from $0.90 for FY2005. The decrease was primarily due to a significant increase in the provision for income taxes, lower operating segment income and higher net interest expense partially offset by an improvement in the results of discontinued operations.

“Looking ahead, we’ll continue to target a dividend payout ratio of 40% to 50%, with the payout in fiscal 2007 exceeding that range, and we remain committed to further reducing our net debt this year by $1bn as well as buying back approximately $500m of stock,” Barnes said.

The Sara Lee boss spoke of a challenging year, and although the company said it would miss its margin targets Barnes said that she was confident the transformation plan was progressing well. “I am confident that the progress we have made with the transformation of Sara Lee during fiscal 2006 gives us the foundation we need for strong future performance,” she commented.

“As we look to our long-term targets, I firmly believe that Sara Lee will be a 12% operating margin company. However, given the challenges we faced in fiscal 2005 and 2006, we will not achieve that milestone until after fiscal 2010,” Barnes concluded.