Hillshire Adds to its Dessert Plate

Hillshire Brands Company (HSH - Snapshot Report), formerly Sara Lee Corporation, has launched a new version of its popular Lemon Pound Cake and an improved Butter Pound Cake under its famous brand Sara Lee.

The newly-launched Lemon Pound Cake is a variation of the traditional American lemon cake and contains real lemon juice. The cake can be complimented with fresh fruits and whipped cream. The Butter Pound Cake is now moister than before, just the way consumers prefer. Sara Lee Desserts has a wide portfolio of sweet goods, including cheesecakes, pound cakes, pies, cakes and sweet breakfast products. The addition of these two varieties will make its portfolio richer than before.

There is an increasing demand for new varieties of healthy packaged food products that are tasty and can be easily served. Also, given the rise in lifestyle diseases, more and more people are concerned about the nutritional value of packaged food. Consumers prefer food products with simple natural ingredients with minimum preservatives and optimum processing.

As such, Sara Lee is focused on catering to these demands by bringing in product innovation and increasing the nutritional value of its food products. Some of its newer products have fewer calories per serving, as well as less cholesterol. The products are also packaged in a way that helps portion control so that even ‘sinful’ desserts can be consumed in a healthy way.

Sara Lee intends to focus its resources on its most profitable food and beverage businesses. As such, the company has been shedding its redundant units one by one. On June 2012, Sara Lee Corporation completed the spin-off of its international coffee and tea business into a separate publicly traded company. After the spin-off, the coffee and tea company is to be called CoffeeCo whereas Sara Lee Corporation changed its name to Hillshire Brands Company. The spin-off is part of Sara Lee’s plan to trim its portfolio in order to provide the best foundation for a strong and focused business.

Hillshire Brands Company offers packaged meat and other food products. The company owns famous brands like State Fair, Hillshire Farm, Jimmy Dean, Ball Park, Sara Lee frozen bakery and Chef Pierre pies.

We currently have an Underperform recommendation on Hillshire Brands Company. The stock carries a Zacks #4 Rank (short-term ‘Sell’ rating).