Tupperware Reports Q2 2016 Results – Down 4% To $564.7 Million

 

Tupperware Brands Corporation recently announced second quarter 2016 operating results. Rick Goings, Chairman and CEO, commented, Though down 4% with a 7 point hit from exchange rates, we grew sales by 3% in local currency – the high end of our range, with significant contributions from Brazil, China, Malaysia/Singapore and Tupperware Mexico.

Goings continued, When we look at the success of our large businesses in Brazil, up 22% in dollars and 41% in local currency, and Tupperware Mexico, down 2% in dollars but up 16% in local currency, it is proof of concept that the fundamentals of our business can generate significant returns from our 3.1 million global sales force.

This is most significantly the case in the opportunity rich emerging markets, including through leverage from our Vision 20/20 core execution initiatives.

At the same time, we're innovating the Tupperware experience with digital tools, right now most visibly in China where we were up 19% in dollars in the quarter and 25% in local currency, to leverage our strength in social selling to further penetrate the end consumer base versus our historical approaches.

Second Quarter Executive Summary

   —  Second quarter 2016 net sales were $564.7 million, down 4% in dollars and up 3% in local currency. Emerging markets**, accounting for 66% of sales, were down 4% in dollars and up 7% in local currency. The most significant contributions to the second quarter growth in local currency were in Argentina, Brazil, China, Malaysia/Singapore and Tupperware Mexico, partially offset by Egypt and Turkey. Indonesia, the Company's largest business unit in 2015, grew sales by 3% in dollars (4% in local currency) after having been down 13% in dollars (8% in local currency) in the first quarter. Established markets were down 3% in dollars and 4% in local currency, primarily from BeautiControl, France and Germany.

— GAAP net income and diluted earnings per share were $52.4 million and $1.03 versus $62.0 million and $1.23 in the prior year, respectively. In 2015, net income included pre-tax gains of $10.5 million from land transactions around the Company's Orlando headquarters versus less than $1 million in 2016. Adjusted, diluted earnings per share of $1.16 was 4 cents above the April outlook range, net of a 1 cent drag from changes in foreign exchange rates versus 2015 compared with the guidance, and reflecting higher sales and operating margins in Asia and South America. Versus 2015, there was a negative 14 cent impact from changes in exchange rates on the diluted earnings per share comparisons.

— Total sales force of 3.1 million was up 5%, with active sellers down 2% versus prior year.

Second Quarter Business Highlights

— Second quarter 2016 net sales were $564.7 million, down 4% in dollars and up 3% in local currency. Emerging markets**, accounting for 66% of sales, were down 4% in dollars and up 7% in local currency. The most significant contributions to the second quarter growth in local currency were in Argentina, Brazil, China, Malaysia/Singapore and Tupperware Mexico, partially offset by Egypt and Turkey. Indonesia, the Company's largest business unit in 2015, grew sales by 3% in dollars (4% in local currency) after having been down 13% in dollars (8% in local currency) in the first quarter. Established markets were down 3% in dollars and 4% in local currency, primarily from BeautiControl, France and Germany.

— GAAP net income and diluted earnings per share were $52.4 million and $1.03 versus $62.0 million and $1.23 in the prior year, respectively. In 2015, net income included pre-tax gains of $10.5 million from land transactions around the Company's Orlando headquarters versus less than $1 million in 2016. Adjusted, diluted earnings per share of $1.16 was 4 cents above the April outlook range, net of a 1 cent drag from changes in foreign exchange rates versus 2015 compared with the guidance, and reflecting higher sales and operating margins in Asia and South America. Versus 2015, there was a negative 14 cent impact from changes in exchange rates on the diluted earnings per share comparisons.

— Total sales force of 3.1 million was up 5%, with active sellers down 2% versus prior year.

Europe: Egypt and Turkey drag segment sales down 13% in dollars and 9% in local currency

    —  Emerging markets were down 25% in dollars and 14% in local currency, mainly from currency convertibility and product certification issues in Egypt, as well as volatile externals and a change in promotional approach and curtailment of bulk sales and timing in Turkey. In South Africa, Tupperware was up 1% in dollars (up 24% in local currency) and Avroy Shlain was down 8% in dollars (up 14% in local currency). CIS was down 11% in dollars (up 21% in local currency).

    —  Established markets were down 4% in dollars and 6% in local currency. France was down 8% in dollars (10% in local currency) and Germany was down 1% in dollars (4% in local currency).

Asia Pacific: China and Malaysia/Singapore up significantly along with Indonesia up mid-single digits, partially offset by results in India and Philippines

    —  Sales for the segment were up 1% in dollars and 5% in local currency.

    —  Emerging Markets were up 2% in dollars and 7% in local currency. China was up 19% in dollars (25% in local currency), Malaysia/Singapore was up 9% in dollars (20% in local currency) and Indonesia was up mid-single digits, partially offset by Philippines, down in the mid-teens, in connection with the 2015 decision to exit the fashion category, and India, down 12% in dollars (7% in local currency).

Tupperware North America: Tupperware Mexico continues to leverage strong fundamentals, U.S./Canada compensation plan transition on track

    —  Segment sales down 1% in dollars and up 6% in local currency. Tupperware Mexico sales down 2% in dollars (up 16% in local currency) on 13% larger sales force versus prior year.

    —  Tupperware United States and Canada sales even with 2015 in dollars (up 1% in local currency). Sales force size closed 6% above prior year.

Beauty North America: Segment sales were down 19% in dollars and 8% in local currency

    —  BeautiControl sales down 14%, mainly in connection with lower productivity among the career seller base.

    —  Fuller Mexico sales were down 20% in dollars (6% in local currency) reflecting lower sales force additions and activity, though it was a sequential improvement from the first quarter. Total sales force size was down 11%.

South America: Segment sales up 8% in dollars and 32% in local currency driven by Brazil

    —  Brazil was up 22% in dollars (41% in local currency), reflecting higher volume from a 19% advantage in total sellers and 40% more active seller in connection with the pace of sales force addition initiatives and robust marketing.

    —  Argentina was down 19% in dollars (up 27% in local currency) from inflation related higher prices.

    —  Segment's active sales force was up 13%.

About Tupperware Brands Corporation

Through an independent sales force of 3.1 million, is the leading global marketer of innovative, premium products across multiple brands utilizing a relationship based selling method. Product brands and categories include design-centric preparation, storage and serving solutions for the kitchen and home through the Tupperware brand and beauty and personal care products through the Avroy Shlain, BeautiControl, Fuller Cosmetics, NaturCare, Nutrimetics, and Nuvo brands.