Approximately 43 percent of its sales and earnings are derived from foreign sources. It is unlikely that hog costs will get to a favorable comparison until the first half of F02, which corresponds to the second half of the 2001 calendar year. Prices for most other major commodities should be favorable for food processors. Coffee prices are expected to recede from the higher levels of the past six months. With much consolidation accomplished and ongoing among the processors customers including the grocery, convenience stores and mass merchandisers, there is not the same amount of pricing flexibility to food processors that had been available in the past.
Energy costs appears to be an important consideration now.
With the approach of warmer weather energy costs should moderate in coming months and perhaps moderate relief may be on the way in this regard. The apparel sector has been a lackluster area in recent years as customers transitioned down to more casual dress and conditions are being further pressured by a slowed economy. In focusing on Intimates and Underwear, SLE is less impacted by fashion changes and experiences steadier demand characteristics. Operating income in the first half was down 19 percent although was about flat in the meat segment. Profits were also negatively impacted by the effect of increased media advertising and promotional spending.