Sara Lee's Intimates and Underwear business finished fiscal 2002 with strong sales and profit gains from its core underwear and intimates operations the company said today. For the year overall, however, sales dropped 13 per cent from $7,452m to $6,455m and operating income dropped 20 per cent to $676m from $844m a year earlier.

Fourth quarter operating income rose 19 per cent from $195m to $232m, despite a 16 per cent increase in media advertising and promotion spending, as all three segments - Intimate Apparel, Knit Products and Legwear - contributed to the increased operating income.

In particular, this business benefited from increased sales of higher margin products and significant cost savings and production efficiencies derived from reshaping activities over the last 24 months. Total unit volumes for Intimates and Underwear increased two per cent in both the fourth quarter and the full year, benefiting from Intimate Apparel and Legwear gains during both periods.

Unit volumes for worldwide Intimate Apparel rose five per cent for the quarter and increased three per cent for fiscal 2002. Sales were particularly strong in the United States where the company's 12-month unit share of the bra market increased more than two points to 31 per cent. New product activity included Bali Shoulder Spa, with a patented gel strap for comfort, and Playtex Magic Feeling, which is selling above expectations in Italy, France and Spain. In the United States, Playtex brand sales to Wal-Mart increased nearly 30 per cent in the fourth quarter.

Global Knit Products unit volumes were flat in the fourth quarter but rose 1 per cent for the full year. During the quarter, US underwear unit sales increased 2 per cent, and the company increased its 12-month unit shares of both the men's and women's categories, with shares of 37.6 per cent and 34.3 per cent, respectively.

US activewear unit volumes in the fourth quarter increased three per cent, led by a double-digit increase in printable sales as this segment benefited from improved industry trends. Knit Products units fell four per cent in Europe, although both sales and operating income increased.

Global Legwear unit volumes increased three per cent in the fourth quarter and rose one per cent for the full year, led by gains in the sock business in both periods and increased sheer hosiery unit sales during the fourth quarter.

The company increased its 12-month dollar share of the US sheer hosiery market by nearly three points to 54.4 per cent, and increased its unit share of the US sock market by more than three points to 18.5 per cent.

Looking ahead, Sara Lee's management expect revenues for Intimates and Underwear to continue to be affected by discontinued product lines in the first quarter, but operating income is expected to increase at a strong double-digit rate.