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Chief Executive Takes the Lid Off Tupperware Sales Routine

Household products: Rick Goings turns to the Internet, TV, kiosks and retailers to augment business from home parties.

October 07, 2002|DELBERT ELLERTON | BLOOMBERG NEWS

Tupperware Corp. Chief Executive Rick Goings is doing away with the one-party system as he tries to sell more plastic food-storage containers.

Goings is expanding beyond Tupperware's home parties to malls, the Internet and television to boost sales and profit in Europe, the company's biggest market, and build up its independent sales force of 1.2 million.

"The party is at the core," he said. "But how do we also provide more access to other consumers who want to buy Tupperware products?"

Goings' plan, which includes selling in stores for the first time in 50 years, helped boost sales in the U.S. by 32% in the last two years as consumers bought new products such as $49 water-filter pitchers and $16 ice cream scoops. Investors are counting on Goings duplicating that feat in Europe, where sales have declined for six straight years.

"If they get Europe growing at the same rate as the U.S. did last year, earnings will be very good," said analyst Gary Soura of Schneider Capital Management, which owned 739,100 Tupperware shares as of March.

Investors could use some good news. Earlier this month, Goings lowered Tupperware's 2002 profit forecast, in part because the company cut prices and increased spending on incentives to motivate its sales staff and recruit new representatives in Europe. Tupperware may miss that forecast unless sales pick up in Europe, analysts and investors said.

The Orlando, Fla.-based company's stock has fallen more than 40% since Goings took over in August 1997. The shares fell 29 cents Friday, to $16.16 on the New York Stock Exchange.

Founded in 1946 by inventor Earl Tupper, the company sent salespeople into homes to demonstrate how the containers' airtight seal worked. The gatherings proved so successful that Tupperware stopped offering its products in stores in 1951, in favor of direct sales.

Tupperware returned to retail shelves last year when Goings teamed with Kroger Co., the biggest U.S. supermarket chain, and discount retailer Target Corp.

Tupperware, which had $1.1 billion in sales in 2001, has more than 600 mall kiosks in the U.S. It opened its first one four years ago. Its products are getting exposure on three one-hour shows a month on USA Interactive's Home Shopping Network, Goings said.

Expanding distribution helped Goings revive the Tupperware party as the company recruited more independent salespeople.

"A larger sales force [means] increased sales," said Rommel Dionisio, an analyst at Friedman Billings Ramsey & Co., who rates the shares "buy" and doesn't own them.

Sales from Tupperware parties in North America rose to $183.7 million last year from $151 million in 1999, the company said. Sales through other channels rose to $22.2 million from $7.2 million.

Goings, a former Avon Products Inc. executive, also gave the Tupperware party a makeover to keep up with changing lifestyles as more women work outside the home.

"More [parties] take place in the evening," he said. "It's wine and cheese. It's often girls' night out."

Though total U.S. sales rose to $234.6 million last year, they still lag levels of more than a decade ago. Until Tupperware expanded its U.S. distribution, sales had fallen to $176.7 million in 1997 from $285.2 million in 1990.

"In the U.S., Tupperware parties had faded," Soura said. "Tupperware wasn't in the forefront of consumers' minds."

Goings' marketing strategy has helped Maier Runyon, an Atlanta-based Tupperware distributor, who employs 1,400 independent sales representatives and had $3 million in sales last year.

"We weren't doing much advertising," said Runyon, who operates the business with her husband, Scott. "Now, you can't go a week without seeing Tupperware on TV or at the malls."

Goings also is adding redesigned products such as Rock 'n Serve microwaveable containers and new items such as Open House Chip 'n Dip bowls.

Goings said Tupperware doesn't compete against companies such as Newell Rubbermaid Inc. that make less expensive storage containers.

Sales in Europe peaked at $595.1 million in 1995. Revenue has fallen every year since then, dipping to $400.4 million last year as high unemployment and inflation in Germany hurt sales, Goings said.

The company expects sales in Europe this year to be unchanged from 2001, spokeswoman Jane Garrard said.

Goings is expanding the number of kiosks at European malls to 300 by the end of the year from 130 now. He said the company is hedging to protect against currency fluctuations.

Tupperware will start selling on the Internet in the third quarter and is considering using the Home Shopping Network in Italy and Germany, Goings said.

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