By Jessica Yun
Sara Lee, the household name behind frozen cheesecakes, pies, crumbles and ice creams, has appointed voluntary administrators after suffering higher operating costs and supply chain issues that disrupted operations over the past 12 months.
Established in Australia in 1971, the dessert manufacturer yesterday appointed FTI Consulting’s Vaughan Strawbridge, Kathryn Evans and Joseph Hansell as administrators and will keep operations running in a bid to restructure the business.
Sara Lee is famous for its frozen desserts, including cheesecakes, pies and ice creams.Credit: iStock
Strawbridge said Sara Lee was an iconic brand with more than 200 staff employed at its manufacturing facility on the Central Coast of NSW.
“We are working with Sara Lee’s management team and staff to continue operations while we secure the future of the business. We are immediately commencing a process to sell or restructure the business and continue its long history of manufacturing in Australia,” he said.
“We expect a lot of interest in the business and will work with those parties and stakeholders to achieve an outcome as soon as possible to secure the ongoing business and provide clarity to its loyal and committed staff and customers.”
The popular products, which include a range of cheesecakes, chocolate Bavarian cake, apple pies and crumbles, sticky date pudding and ice cream range, are sold in Woolworths and Coles.
The business was founded in the 1930s by Chicago resident Charles Lubin, who made a fresh cheesecake and named it after his daughter Sara Lee. Demand for Lubin’s products grew, which led to him perfecting a frozen line of products that met his high standards.
Australian operations were set up in Central Coast’s Lisarow in 1971, where it continues to make cakes every day. In June 2021, New Zealand private equity firm South Island Office (SIO) purchased the Sara Lee brand from Canadian frozen food multinational giant McCain for $36.5 million.
Documents recently filed to corporate regulator ASIC show the Australian business was recently profitable, making nearly $27.7 million in profits after tax between May 28, 2021, and July 2, 2022.
But the report, prepared by auditor BDO and submitted to ASIC in early September, reveals the frozen dessert business was “reliant on the continued support from its shareholders and banker” and undershot financial profit projections.
New York, 2003: Sara Lee has become a household name.Credit: Mario Tama/Getty Images
“This presents a material uncertainty which may cast doubt in regard to the company’s ability to continue as a going concern and therefore it may be unable to realise its assets and discharge its liabilities in the normal course of business.”
While demand for Sara Lee’s products are strong, higher operation costs resulted in Sara Lee Australia “trading at a loss this financial year”, the report stated. A capital raising of $3 million was undertaken to improve the business’ liquidity position.
After the reporting period concluded in July 2022, Sara Lee’s Australian business faced a series of challenges that disrupted the business, including the closure of rail lines between NSW and Western Australia due to La Nina flooding that led to a supply shortage in Western Australia; strike action at a packing supplier that temporarily halted the supply of boxes to Sara Lee for two weeks; and the collapse of trucking group Scott’s Refrigerated Logistics earlier this year, which impacted the storage of frozen products and resulted in a one-week closure.
The cake maker increased prices across all its products in May this year.
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2023-10-18 06:49:07Z
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