Tupperware beauty biz takes off

Drug Store News,  May 23, 2005  by Antoinette Alexander

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NEW YORK -- When one thinks of Tupperware, it is likely that plastic storage containers and hostess parties first come to mind--not beauty products. However, the $1.2 billion company is hoping to change that.

Since acquiring Dallas-based BeautiControl in the fourth quarter of 2000, Tupperware Corp. has seen its beauty business double in size and post substantial increases in both sales and profits, prompting the company to take an even closer look at the high-growth segment.

In 2004, BeautiControl posted sales of $118.2 million, up 27 percent versus the year-ago period, and generated $8 million in profits. The trend continued into the first quarter ended April 2, as it posted a sales increase of 37 percent to $34.6 million and reversed a year-ago loss of $500,000 to a $2.8 million gain.

In addition, Tupperware Corp.'s gross margin as a percentage of sales rose to 65.3 percent in 2004 versus 64.6 percent in 2003 owing, in part, to the beauty division.

In 2005, the company expects continued improvement in the segment's return on sales and expects it to reach double digits.

The beauty division--which sells its skin care and cosmetics products through an 85,000-plus independent sales force at parties dubbed Spa ESCAPES or Image Parties--has expanded into Mexico, Malaysia and Singapore and will enter the Philippines and Venezuela this year.

The beauty business, which operates as a separate segment, is an attractive growth vehicle for Tupperware, as it affords the company products that--unlike the lifetime-guaranteed plastics--need to be restocked, generating a flow of repeat consumers. It also helps offset woes at the company's North American Tupperware business.

In 2004, the North America Tupperware business posted a $31 million loss compared with a $22.4 million loss in the year-ago period, as sales dropped 15 percent to $195 million. In the first quarter, the Tupperware business narrowed its loss to $3.8 million, compared with last year's $12.5 million loss, but still experienced a 17 percent sales erosion to $39.2 million because of declines in the active sales force.

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