Sara Lee 2013 Annual Report Download - page 5

The Hillshire Brands Company 3
3.5 percent of revenues. Our goal is to get that number to ve per-
cent by scal 2015. In scal 2013, we stepped up our investment
to 4.4 percent. This increase was highly focused against a small
number of brands – most notably Jimmy Dean. I’m very pleased
to report that we are seeing attractive returns, with each of these
investments delivering very good growth.
We accomplished a lot on the innovation front in scal 2013.
First, we put a dedicated team in place to overhaul the innovation
process and rebuild the pipeline. We set clear expectations that by
scal 2015 we would be generating between 13 and 15 percent of
our annual revenue from products that were launched in the previous
three years. We have already made great progress, climbing to 11 per-
cent in scal 2013 from our historic average of nine percent. One
example is Jimmy Dean Delights, which shows how we are strengthen-
ing one of our core brands. We launched several new Delights items in
scal 2013 and saw sales growth of more than 30 percent. Another
instance is our Ball Park Flame Grilled burgers, which is an example
of how we are extending our power brands into adjacent categories.
We took the Ball Park brand into the frozen category, backed it with
great MAP support and saw sales grow meaningfully. e majority
of our innovation investment in scal 2013 was targeted to a few
core brands. Moving ahead we plan to expand these efforts to
materially impact all of our core brands.
RIGOROUS COST MANAGEMENT
To help fuel our growth, we have embraced a rigorous approach to
cost management. We remain on track to deliver $145 million in cost
eciencies, spread over the rst three to four years of our existence.
Importantly, we achieved our goal of $40 million in cost savings in
scal 2013 and have plans in place to execute against the remainder.
Of course, there is more to this work than just the monetary savings.
We are also building core capabilities that will enable us to do more
with less, which bodes well for sustainable growth and protability.
AN ALIGNED CULTURE
Beyond cost savings and eciencies, we’ve worked this past year
to align employees around our sense of purpose, which is to “fulll
the hunger for a life well fed.” is involves providing employees
with a rewarding work experience that allows them to grow and
perform at their best. It also includes our work in the communities
in which we have a presence. is is an area where we can help those
in need, and is a responsibility that we take very seriously.
DISCIPLINED, BALANCED CAPITAL ALLOCATION
We are committed to allocating our significant financial resources
and free cash flow toward a balanced mix of growth investments
and returns to shareholders. In August, reflecting the progress we
made in fiscal 2013, we announced our intention to increase our
dividend 40% in fiscal 2014 and repurchase $200 million of our
stock by fiscal 2015. Additionally, we affirmed our intent to pursue
mergers and acquisitions as a path to value creation. In all the
investments we make, we follow a disciplined approach designed
to deliver positive financial returns.
In closing, I’d like to take a moment and thank our thousands
of employees throughout the United States. While we have had a
successful rst year, I know we are all hungry for more. We share
the same passion for winning and “refuse to lose” attitude that will
drive this company forward in the future. I’d also like to thank you
for your investment in The Hillshire Brands Company. We truly
appreciate your support of our business and future direction, and we
look forward to sharing our progress with you in the years to come.
Sean Connolly
President and Chief Executive Ocer