When storing anything in the kitchen or home, the one product that comes to mind is Tupperware. Tupperware Brands Corporation (TUP, Financial) is creating a niche in the business world by making a difference to the lives of millions through its innovative storage products and extremely attractive business opportunity. Tupperware, best known for kitchen storage, has expanded its product lines by including cutlery, microwave products, toys and gifts, microfiber textiles, cosmetics, toiletries, fragrances, jewelry, and nutritional supplements. Approximately 25% of sales each year comes from new products introduced in the last two years.
This global direct-to-consumer company operates its business under five reporting segments in three geographic regions: Europe (Europe, Africa and the Middle East), the Asia Pacific and the Americas (North America and South America). The company’s brands include Tupperware, Avroy Shlain, BeautiControl, Fuller Cosmetics, NaturCare, Nutrimetics, and Nuvo. Tupperware’s products are sold by an independent sales force to consumers outside traditional retail store locations, the products are now also sold through a variety of larger distributors and dealers.
Mixed figures posted
On April 22, Tupperware announced first quarter 2015 operating results. Although the company has a strong business model, it reported mixed results due to a few challenged markets.
The company’s first quarter net sales were $582 million, and emerging markets, accounting for 66% of sales, achieved an 8% increase in local currency. Established markets were down 6% in local currency primarily from Europe. Significant contributors to sales growth were Argentina, Brazil, China, Tupperware U.S. and Canada, and the South African businesses. GAAP net income of $29.5 million was down 44% from the prior year. Excluding the impact of foreign currency rates on the comparison, net income was down 16% versus prior year. Earnings per share without items was down 22% versus last year in dollars and up 4% in local currency. The total sales force of 2.9 million was up 2% versus prior year at the end of the quarter. A chart has been provided below to show Tupperware’s segment performance.
In the Europe segment, lower sales in France and Germany was offset by strong sales in Portugal and the two South African businesses. Tupperware’s established market sales In the Asia Pacific region has offset Tupperware Japan, which was down by 20%.
Positive outlook
Rick Goings, Chairman and CEO of Tupperware has said that improved results is expected in the coming quarters. Further, the company is executing its strategies to update the business model, strengthen its core business fundamentals and extend its reach to better support and grow its 2.9 million global sales force. A chart has been provided below to show Tupperware’s second quarter 2015 and full year 2015 guidance.
Why Tupperware?
This leading global marketer of innovative, premium products has a solid track record of local currency sales each year (5% to 9%) from 2007 to 2014. From 2007-2014, Tupperware has purchased 21.3 million shares (50.3 million outstanding). Since 2009, the company has a solid track record of free cash flows, has paid solid dividends to its shareholders, and has a consistent growth history of sales and EPS.
Tupperware has a strong global footprint with nine markets over $100 million and is making strong efforts to strengthen its position in India and China as these two countries are the largest opportunities for penetration. To reach more consumers and to enhance sales force digital tools, Tupperware is leveraging its technology by introducing mobile office for field managers. Further, Tupperware is going to introduce sales force app which will help to access online brochures, and to enter orders through the app. To extend its reach, Tupperware is taking new initiatives such as “Tupperware Experience Center” which will help the consumers with updated look and will increase the brand awareness.
On a concluding note
Tupperware is a rock solid company with a good business opportunity, although it has reported mixed Q1 2015 result. The company has a diversified portfolio for sustainable performance, significant return of capital to shareholders, and opportunities for above average growth. Additionally, Tupperware has a notable return on equity, expanding profit margins, and good cash flow from operations, which will help to mitigate the current position in the future. I am therefore pretty bullish that Tupperware will not let its valued investors as well as customers down in the near future.
(Source: Company’s Website)
