Tupperware Corp. is reducing its reliance on internally made products.
Officials from the Orlando, Fla., housewares major talked about the strategy during an April 21 conference call announcing first-quarter results.
``It is our intention over the next five to six years to outsource approximately 50 percent of our products, including core plastic products and noncore, nonplastic products,'' Jane Garrard, vice president of investor and media relations, said in a follow-up e-mail April 22. ``We plan to maintain six to seven facilities around the world and will retain a proficiency in injection molding.''
On April 2, Tupperware laid off 22 workers at its injection molding site in Hemingway, S.C. The site still employs 560. That move was made ``in an effort to align the cost structure with sales trends in North America,'' Garrard wrote.
``We find a product category, we can add value, but we have someone else make that product for us, and it doesn't require the capital investment,'' said Rick Goings, chairman and chief executive officer, referring to the plan as the Nike model.
Officials said they don't know yet which facilities the firm will maintain. Tupperware has manufacturing plants in Belgium, Brazil, France, Greece, Japan, South Korea, Mexico, the Philippines, Portugal, South Africa and the United States, and leases manufacturing and distribution facilities in China, India and Venezuela.
Analyst Rommel Dionisio of Roth Capital Partners LLC in Newport Beach, Calif., said the strategy makes sense.
He specifically noted that the cuts at Hemingway were to be expected, in light of a 19 percent sales decline in North American sales during the first quarter. Tupperware's North American sales during the first quarter were $45.4 million; total first-quarter sales were $296.4 million.
``If sales are down 19 percent, of course they're going to rationalize the business,'' he said.
In addition to its core business of storage products, Tupperware will expand its product line to include an array of kitchen items.
In North America, Tupperware's thrust will be rebuilding its direct sales force, which has been hurt in the past year as Tupperware attempted to sell its product in mass retail through Target Stores. Tupperware ended its relationship with Target in September.
``It was the right approach, us testing this retail approach, and it was the right thing to get out of ... but my goodness gracious, it's hurting two years of the U.S. business,'' Goings told analysts and shareholders.
``We sure answered once and for all, can you do direct sales and a mass-retail approach? No, with a capital N.''
Goings said Tupperware has made progress in converting the brand from primarily a storage container business to a contemporary brand that provides innovative and fashionable products in multiple categories. It will attack business with a five-platform approach, including seasonal products; art and design statements; ``surprising solutions,'' including ergonomic designs in items like nutcrackers to jar openers; brand-building products; and an emphasis on technological advancements. For instance, cheese is a European staple, so Tupperware came out with a container that keeps cheese fresh longer.
In the United States, that means shifting toward kitchen, tools and gadgets.
In China, where direct selling is illegal, Tupperware is opening hundreds of entrepreneurial storefronts. It currently has 986 stores in that country.