Tupperware Brands Corporation (



Q2 2011 Earnings Call

July 27, 2011 8:30 am ET


Rick Goings - Chairman and CEO

Mike Poteshman - EVP and CFO

Nicky Decker - our VP of IR and Strategy


Dara Mohsenian - Morgan Stanley

Olivia Tong - Bank of America

Mark Schwartz - SunTrust

Bolton Weiser - Caris

Jason Gere - RBC Capital Markets

Gregg Hillman - First Wilshire



Compare to:
Previous Statements by TUP
» Tupperware Brands Corp. Q4 2009 Earnings Call Transcript
» Tupperware Brands Corp. Q3 2009 Earnings Call Transcript
» Tupperware Brands Corporation Q1 2009 Earnings Call Transcript
» Tupperware Brands Corporation Q4 2008 Earnings Call Transcript

At this time, I would like to welcome everyone to the Tupperware Brands Corporation second quarter 2011 earnings conference call. (Operator Instructions)

Thank you. I would now like to turn the call over to Rick Goings, Chairman and CEO of Tupperware Brands Corporation.

Rick Goings

Thank you and good morning everyone. I'm in Europe, but I'm on the line with Mike Poteshman, our CFO; and Nicky Decker, our VP of Investor Relations and Strategy.

And by the way, we had maybe about 10 years ago an issue with one of our European lines. And so I would advise if I have problem on this end, Mike, you just pick it up on this end and finish the call.

As always, everybody, some of our discussions are going to involve the future outlook of our business. So you know the drill on this, forward-looking statements.

We had another very healthy quarter with a 9% local currency sales increase and adjusted EPS of $1.25. Before I get into the individual performance of our business units, a word about how we really manage this global portfolio, because it is I believe one of our sources of competitive advantage.

Because it's a global portfolio, there are many external and internal forces at play. So we've got to manage this dashboard. And as with all portfolios, you have a share of plusses and minuses performance-wise. I believe as a company, we are getting better each year at both keeping our momentum in our growing markets and also learning how to fix those markets where there are issues.

And we're very close, simply stated, to our business units. And let me highlight how we're working on this. Every country has a President or a Managing Director. Every region within a country has a Regional Vice President. And every Regional Vice President oversees a certain number of distributors, often 10 to 20 distributors. And typically, distributors, depending on the kinds of market, have 300 to 500 sales force, plus 30 to 50 managers. All these are independent agents.

Now, we manage every single week a measure of the key productivity indicators or KPIs. I don't care even if it's a U.S. holiday, we're a global company. Every Monday morning, 52 weeks a year, at 10:00 a.m. East Coast Time, there is an executive committee call, which lasts for about an hour, where we both report on the previous week's actual. We have a report called the Sunshine Report. And then we drill down. There we know as early as Monday of every week what the sales were the previous week by market, by region, by distributorship, what the recruits were like. And this also gives us an idea of what the upcoming party schedule looks like.

To add to this, we have a monthly performance review, and that monthly performance review lasts about a day-and-a-half. Simon Hemus, our President and COO, runs both of those meetings, by the way. But about a third of the time is spent talking through results of the previous month. Two-thirds of the time is spent on forward-looking discussions.

But anyway, I share this with you, because many of you have asked how do you keep your hand on the wheel on this. And that's the way we do it. That's our methodology.

I would also say that one of the things we've learned how to do is bifurcate the kinds of markets we have. There are two kinds of markets we have, established markets, and we have the emerging. We use the World Bank definition, and it's usually based on per capita GDP.

If you haven't read it, I would really recommend for many of you that follow global businesses, read Fareed Zakaria as the guy who does on the weekends GPS, The Post-American World. And the reason I would recommend reading that is that not that it slams the U.S., but it really is the discussion of the rise of the West. And it's interesting. At The World Economic Forum each year, we do previews into what the world is going to look like in the future. And simply stated, we have 6.3 billion in the world now. There will be 9.3 billion people by the year 2040. And those incremental 3 billion people will not be coming to Western Europe or the U.S.

But having said that, we are not just an emerging market story. The plusses of our established markets are very high per capita incomes, often north of $30,000 per year. So it's interesting in a market like France, our hottest selling product is $140. So there is a lot of growth left for us in our established markets of the world because of high per capita GDP. And we have many areas where it's white space for us.

Turning to the emerging markets, though, the big plusses there are obviously population, limited earning opportunities for women, not much of a retail infrastructure and a dynamic growing middle class. So it's the combination of a very good story. So whereas the hottest selling product in France is $140, the hottest selling product in India is a $4 lifetime guarantee (water bottle).

So anyway, we differentiate how we manage these markets. And if somebody says are we an emerging market-only play, no it's not an "or", it's an "and" for Tupperware. And we do very well in both kinds of markets.

Now, let me turn to local currency performance. And again, I'll do my best not to be redundant with what you already know, but drill down in some other areas. I want to start with our emerging markets where overall we grew 15% in the quarter, and they represent about 58%. That's kind of the run rate. Last quarter, it was 57% of our portfolio for the quarter.

First, our emerging markets in Europe, Turkey and South Africa led the pack with both having double-digit increases. However, this performance was partially offset by a decline in Russia, which I'll get into in a moment, resulting still growth and a 12% increase for the European piece.

Our Tupperware and Beauty businesses in South Africa, by the way, grew 15%. And it is worth commenting that in advance of a nation-wide manufacturing across the board for all industries, like that was in early July, our guys there just did a great job of taking action. The plant worked like (mad) to be able to shift Tupperware, and our distributors ordered so they were able to service their sales force during the strike. Good news is the strike has now ended, and we are pleased to report that we really had no service disruption to the sales force. So again, we're very proud. Our guys there navigated through this difficult situation.

In Turkey, what an impressive quarter, again up 65%. And there, we're getting increases from both improved productivity and a larger sales force, and we ended June with a 24% advantage in sales force. But when you put that again to 65% increase in sales, that says, wow, to our guys there, big productivity increases as well. And they're working very hard to get more of our sales from group selling parties, because it makes a better earning opportunity to the sales force. And I might add, Turkey has a population of about 80 million people. So we have a lot of runway left to continue to grow there.

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