Tupperware Brands Corporation today announced first quarter 2018 operating results.
Rick Goings, Chairman and CEO, commented,
“Due to our soft result on the top-line, as well as a higher tax rate, adjusted earnings per share in the first quarter was 10-cents below the low-end of our January guidance range and 16% below the prior year in local currency. The impact to our annual cash flow from lower earnings is expected to be modest and more than offset by the sale of assets under our revitalization program.”
“We were pleased in the quarter with good performances in China, Mexico, Malaysia/Singapore, South Africa, and the United States and Canada, even though we were disappointed overall. With the disruption from the closure of the supply chain facility in France behind us, we remain confident in our global growth strategy, especially the opportunity in emerging markets.
The Tupperware brand, management team and our 3.1 million sales force are each strong and are our most significant source of competitive advantage. With those assets in our arsenal, we will forge ahead with our strategy to adapt and evolve through our integrated use of digital tools, branded contact points and a relevant earning opportunity that empowers and cultivates confidence in women across the globe.
It is based on the confidence we have in our business prospects that today we announced a $200 million opportunistic share repurchase, while continuing to support our dividend.”
First Quarter Executive Summary – (Comparisons with First Quarter 2017)
- Net sales were $542.6 million, down 2% (6% local currency), including a 2-point impact from the closure of Beauticontrol in 2017. Emerging markets**, accounting for 70% of sales, were up 3% (1% local currency). The most significant contribution to the first quarter growth in local currency sales was in China, along with good results in Argentina, CIS, Fuller Mexico, Malaysia/Singapore, Tupperware Mexico and Tupperware South Africa, partially offset by India and Indonesia. Established market sales decreased 12% (19% local currency), including the impact of the Beauticontrol closure. The local currency sales decreases were most significant in France, Germany and Italy, partially offset by the United States and Canada.
- GAAP net income and diluted earnings per share were $35.7 million and $0.70, versus $47.4 million and $0.93 in 2017, respectively, reflecting the impact of lower sales, a higher tax rate and pre-tax costs in connection with the Company’s re-engineering program that were $5 million, or $0.09, higher in 2018. Adjusted, diluted earnings per share were $0.91. This was 10-cents below the low-end of the January guidance range due to lower sales and 6-cents from an increased tax rate in connection with the U.S. Tax Cuts and Jobs Act of 2017(the “Tax Act”). Versus the January guidance, there was a 1-cent positive impact on adjusted, diluted earnings per share comparison from net stronger foreign exchange rates, while there was a 7-cent benefit versus the same period in 2017.
- Total sales force of 3.1 million was down 2%, a sequential decrease of 5-points, reflecting higher standards to be included in the sales force in the CIS and in the two South African businesses, as well as a 2-point negative impact from removing the Beauticontrol and NaturCare sales forces. Average active sellers in the first quarter were down 8%, including a negative 3-point impact related to Beauticontrol and NaturCare.
First Quarter Business Highlights – (Comparisons with First Quarter 2017)
Europe: Segment sales were down 4% (14% local currency).
- Emerging markets in Europe increased 19% (10% local currency), mainly in Tupperware South Africa, up 24% (11% local currency) and CIS, up 29% (26% local currency).
- Established markets were down 15% (26% local currency), in part, due to service issues in connection with the closure of the French supply chain facility, most significantly impacting Germany, down 17% (28% local currency), France, down 32% (41% local currency), and Italy, down 17% (28% local currency).
Asia Pacific: Segment sales were down 3% (7% local currency).
- Emerging markets in Asia Pacific were down 1% (5% local currency), primarily in Indonesia, down 35% (34% local currency) from a smaller, less active sales force. In addition, India was down 33% (35% local currency), reflecting challenges with the sales force size and manager activity in light of government direct selling guidelines, as well as a negative 6% impact from the goods and services tax effective in July 2017. These decreases were partially offset by increased sales in China, up 35% (24% local currency) on the strength of significantly more members and continued leveraging of the product portfolio, digital technologies and its 6,400 studios (14% advantage over 2017).
North America: Segment sales were up 3% (down 1% local currency), including a negative 7-point local currency impact from Beauticontrol closure.
- Tupperware United States and Canada sales were up 9% (8% local currency), including a positive impact from changes in revenue recognition.
- Tupperware Mexico sales were up 13% (6% local currency) and Fuller Mexico sales were up 14% (7% local currency).
South America: Segment sales were down 5% (up 5% local currency).
- Brazil was down 2% (up 2% local currency), reflecting a deceleration in sales growth due to customer service issues impacting product availability, including a customs strike, the over-sell of certain items, and quality issues with a third party produced item, as well as on-going challenges in the consumer spending environment. These factors negatively impacted the number of sales force additions and new sales force leaders promoted.
- Sales in Argentina were down 1% (up 26% local currency). Local currency comparison mainly reflected price increases related to the highly inflationary environment.
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 social selling.
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, Fuller Cosmetics, NaturCare, Nutrimetics and Nuvo brands.
For more information please visit www.tupperware.com
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