Best in Class: Tupperware Keeps It Fresh

NEW YORK ( TheStreet) -- Although many were impacted by the global financial crisis of the last few years, the baby boomers were among the hardest hit. With retirement in sight -- or having just entered it -- they suddenly found their retirement funds wiped out by one of the worst economic downturns in history.

Like many investors before them, they have since returned their focus -- if they hadn't already done so before -- to seeking out more selective stock investments with characteristics such as steady growth, limited risk and earnings in the form of dividends.

Given this, Tupperware ( TUP) might be a company these newly cautious investors might want to consider. So we sat down with the CEO of Tupperware, Rick Goings, to discuss to company's past, present and future.

We begin with Tupperware's fourth quarter. It's worth noting that all five of Tupperware's segments -- Tupperware North America, Europe, Asia Pacific, Beauty North America, and Beauty Other -- were up in the fourth quarter, as the company posted adjusted earnings of $1.22, a 36% increase from the previous year.

Tupperware's revenue was up 20% to $626 million. The Wall Street consensus estimate for the quarter was $1.04 a share.

And emerging markets posted particularly strong figures for Tupperware -- with Tupperware Brazil, India, Indonesia, Malaysia, Mexico, Russia, South Africa, Turkey and Venezuela all seeing double-digit increases during the quarter.

In the fourth quarter, Tupperware increased the company's share repurchase authorization by $200 million to $350 million, and extended the program to February 1, 2015. Tupperware plans on targeting around 63 million shares and avoiding a dilution effect. The company is also using its cash to reduce debt even further and enhancing value for its shareholders through dividends. Tupperware announced a regular quarterly dividend of 22 cents a share on Aug. 19.

"We believe that the world changed September 2008 and we don't want to have much leverage," Goings says.

Jefferies & Company believes that Tupperware is on track for a first quarter with "emerging markets driving the day." Excluding special items, Tupperware has forecast earnings of 55 to 60 cents a share. Wall Street's consensus for the first quarter has been earnings of 62 cents a share.

"Management reiterated its policy of pre-announcing if its previous expectations are not likely going to be met. With two weeks left in the quarter coupled with pretty good visibility in its business going three weeks out, we conclude that the company has at least met the low end of expectations, although we note that Tupperware has beaten Street expectations by an average of 11 cents each quarter since the 2007 1Q," Jefferies ( JEF) analyst Douglas Lane wrote in a Mar. 23 note to investors.

Meanwhile, Bank of America Merrill Lynch ( BAC) analyst Christopher Ferrara notes on Mar. 26 that Tupperware is "better positioned now than it has been in years past (a result of greater emerging markets exposure supporting faster than group average sales growth, margin expansion potential, and lower debt levels)."

Tupperware's global presence has certainly helped the company weather the uncertain businesses environment of last few years, which it may not have been able to do when it was a younger company. "If I turn the clock back to 1996, we had almost half our profits coming out of Germany," Tupperware CEO Goings tells TheStreet. "If Germany had a cold, it was a disaster for us." Today, the company is present across the globe, including Brazil, Indonesia, Malaysia, Mexico, Russia, South Africa, Venezuela, China, Europe, Asia Pacific and North America.

According to Jefferies, emerging markets accounted for 51% of the company's 2009 sales and grew 14% organically.

With tough, on-the-ground management infrastructure in place around the world, Goings notes that Tupperware isn't an American company attitude-wise.

"The classic example is we have this incredible woman who runs our Venezuelan business," Goings says. "We had a good year in Venezuela last year -- we were close to what was happening to the Chavez government and we basically navigated our way through. I think we'll continue to have growth this year. So I think for the future it's going to be an advantage." At the beginning of the year, Venezuelan President Hugo Chavez announced a steep currency devaluation to bolster government finances and fuel economic growth ahead of crucial elections.

Tupperware has also been successful at mitigating its costs. In 2008, Tupperware's pre-tax return on sales was 9.6%. The company managed to improve that by 2 and a half percentage points in 2009 to 12.1%. The company achieved this increase despite the ongoing economic turmoil.

"We start the year pretty much where we put together a plan, and it says we hope everything works well, but we sit there and we set aside X amount of what would have been investment money, and we say we've got to reach this kind of a target that we're not going to spend this year, and every unit has to contribute," Goings says. He notes that the company does the same for everything from balance sheet-type items "to investment on which facilities you put a new roof on and how many molds do we make this year." One mold for Tupperware can cost a million dollars.

Tupperware has undoubtedly been adroit at spreading out its risk and reducing costs, but if there's another factor that Goings could credit Tupperware's strength to, it would be the company's sales force. "The number one driver of growth in our business is growth in the size of the sales force," Going said. At the end of 2009 the company had 6% more sellers.

Tupperware, during that time, continued to deepen its imprint in growing markets, while managing to double the size of its sales force in France in the last five years, where populations have been shrinking, much like in many other developed European nations. And if Tupperware can manage to find freshness in France, then it can find freshness anywhere.

-- Reported by Andrea Tse in New York

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