CEO Q&A: Tupperware's Goings Talks Turkey - TheStreet

CEO Q&A: Tupperware's Goings Talks Turkey

Tupperware CEO Rick Goings discusses the future of the company -- and how it's attempting to evolving from its June Cleaver image.
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When most people think


(TUP) - Get Report

, they likely conjure images of a 1950's suburban kitchen, with perfectly manicured pot-roasts in hermetically sealed tubs.

But today's Tupperware is far more than your grandma's plastic food-storage containers. The company now boasts a portfolio of eight brands that include beauty and natural care products from Avroy Shlain, BeautiControl, Fuller, NaturCare, Nutrimetics and Nuvo.

And while the company reported a difficult first quarter, as profit fell 20% to $25.6 million, or 41 cents a share, management raised its second quarter and full-year outlook. Tupperware now expects second-quarter earnings of 62 cents, up from 57 cents, and full-year earnings of $2.26 from $2.16.

And even though its first-quarter sales dropped 15% to $462.8 million -- hurt by its North America beauty business and soft sales in Europe -- the company saw double-digit growth in its Indonesia, Brazil and Venezuela Tupperware business.

Against this backdrop -- and with Tupperware set to report its second-quarter results after the market close on Wednesday -- CEO Rick Goings sat down with TheStreet to discuss just how this 63-year-old company has been able to maintain its edge.

TSC: What can investors expect for the second quarter and remainder of the year?

GOINGS: We have always said that if we are going to miss our numbers we would preannounce, which is code for we are going to be in the range of what we said. We are less bad in a time like this. Last year we saw top line growth of 8%; this year will be between 2% and 5%. Women's fragrance and skin-care products are viewed as necessities, and

our customer is committed to them.

How has Tupperware managed to stay relevant and competitive during the recession?

Our business model is very flexible. We can adjust the lever of what products we are selling, what the theme of our parties or selling brochures are, and if consumer spending is lower, we can recruit a bigger sales force. So those three levers give us a lot of opportunity to navigate through challenging economic times.

Also, we always have the ability to respond. You cannot change what's happening out there, but you always have the responsibility to respond.

So what are some ways Tupperware has responded to the changing environment?

Germany has seen a compression of disposable income, so we changed the name of our Tupperware party to "rumford," which means leftovers. We found Germans throw away 30% of the food they buy. So we came out with a whole party that talks about "rumford" to save money. We have a Tupperware manual food processor called Quick Chef, and we show them how to do omelet mixes and casseroles with leftover food. We also have a product called Forget me Not. When you cut a tomato what do you do with the other half? Most of the time it is thrown away. The Forget Me Not allows the tomato or other items to hang in the refrigerator where you can see it and remember to use it.

Another example of how we responded quickly is with the swine-flu outbreak. The Mexican government said they wanted to close businesses. We didn't close because since we sell both health and beauty products we can be considered critical. We got masks from China for our sales force, plus we re-launched an antibacterial hand sanitizer. Within a week, millions of that product was sold, but the best part is we used the hand sanitizer as an activator to introduce other products to the customer.

You have said the biggest challenge is getting out the message of the evolved Tupperware brand. How are you showing you are no longer the "June Cleaver" Tupperware of the past?

Public relations. We are viewed as a company run by old suits. But we actually operate more as a tech company on the West Coast; much more fashion forward and with it. Our people out there exude this persona, even in the way they dress. This isn't the June Cleaver Tupperware of yesterday. We are in the fashion and beauty business.

We are also heading up a program called "Chain of Confidence" with Brook Shields. The program encourages women to celebrate the bonds of female friendship and to gain confidence in those friendships. It shows Tupperware not only in the light of our product, but in the light of helping women.

Rapper Ice-T also has been on Conan O'Brien numerous times talking about Tupperware parties, which has helped draw publicity, and we have many other celebrity collaborations around the world.

How has the makeup of your sales force changed during the recession?

We are seeing the recruiting pool getting bigger. But what we don't want to do, like some direct sales companies, is just recruit the masses and dumb down the sales process. The biggest thing that we are noticing out in the labor market is there are younger, smarter, better educated prospects, who, if business was as usual, would have a job.

We are seeing a higher quality person coming into the business. She comes in initially because of cash flow; she needs money to make ends meet. But then she sees it's actually a lucrative business and a place she can grow. We show her how to become a unit manager by developing her own parties, and if she becomes a director she can earn between $7,000 and $10,000 a month. At the top level, people who have done this for 10 years, can make $20,000 to $30,000 a month.

Let's talk about Rubbermaid (NWL) - Get Report. How has Tupperware differentiated itself?

While the market may view Rubbermaid as a direct competitor, we don't. We would compare ourselves more to a


(WSM) - Get Report

; more upscale, high quality product. We always say you put your garbage in Rubbermaid and your food in Tupperware.

Rubbermaid is a good company, but what they basically have is garbage cans, serving trays and other commodities. You go into


(WMT) - Get Report

and look at the shelf space of a Rubbermaid and you see there's more kitchen drain-boards and under-counter trash bins. That isn't what we do. We have been trying to market more sophisticated, more upscale products that couldn't be sold in Wal-Mart because the features and benefits need to be described.

We made a very important decision in 1995, when Rubbermaid was knocking off Tupperware products. We said the best way to differentiate is to go where they can't go. So we decided to makes unique, differentiated products, of higher-quality, better engineered, and with lifetime guarantees. You will see Rubbermaid products in the garbage. You won't see ours.

If your products are so long-lasting and people don't need to replace them, what do you do to keep customers shopping?

What we do is make fashionability a bigger part of our products. So women want to have this year's colors. We also upgrade features and benefits of the product and are constantly trying to one-up and knock-off our own products to make them better. We try to have about 25% of our sales come from products that are new in the last two years.

Do woman really care about the fashionability of their Tupperware, especially in this economy?

Well, it depends on the item.

Our customer cares about serving items that go on tables. But fashionability, when it comes to food processors or microwave containers, not so much. But more and more today women don't want to take something out of the microwave and have to put it in something else. She sets it on the table she wants it to look good.

How has overseas business helped the company?

About 86% of our business is out of the United States. This is a huge plus because the U.S is a very competitive market in retail infrastructure and earning opportunities for women. As you get outside the U.S., the retail infrastructure, even in Europe, isn't as well developed. And there is still limited earning opportunity for women.

This doesn't mean we don't need the U.S., but it's less attractive. China, India, Indonesia are 47% of the world's population and there is no real well-developed retail infrastructure -- and in Indonesia and India there are very few earning opportunities for women. Venezuela, Brazil, Aregentina represent the best opportunities. We are growing like a weed in those markets.

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