Sara Lee is Shedding her Underwear

Sara Lee Corp. (Chicago) has announced it is about to spin off its largest division, Sara Lee Branded Apparel (Winston-Salem, N.C.).

The division, which produces Champion sportswear and intimate clothing under the Bali, Playtex and L’eggs brand names, will become an independent, publicly traded company in a process that will occur between March and July 2006.

Sara Lee said it is spinning off the apparel division — as it did its Coach leather-goods operations in 2001 — to focus on its food, beverage and household-products businesses. Sara Lee plans to sell its European apparel business, which has struggled. Last week, Sara Lee said that branded apparel’s operating profit fell 36.4 percent in the three months ended April 2, 2005, because of high cotton costs, lower sales and the expense of phasing out a number of product styles.

The Branded Apparel group, which is tops in U.S. intimate apparel and hosiery, makes bras, boxers, hosiery, socks, and other unmentionables under several top brand names, including DIM, Just My Size, Hanes, Hanes Her Way and Wonderbra, in addition to Bali, L’eggs and Playtex. Sara Lee’s bras are Number One in the U.S.; the underwear, legwear, and activewear (t-shirts, fleeces and sport shirts) units hold leading positions as well. Sara Lee Branded Apparel also makes legwear under the licensed Donna Karan and DKNY names.