Q3 2019 Earnings Call
Call. This time, all participants are in listen only mode. After the speakers presentation for will be a question I mean on first question to ask a question Dream to fashion you want me to press Star one on your telephone if you require any further assistance. Please press star zero.
I would I like to have the conference over to your speaker today dreamed Gerard Vice President Investor Relations. Thank you. Please go ahead matter.
Thank you Jerome welcome to Tupperware brands third quarter 2019 earnings Conference call with me on today's call, our Tricia Stitzel, our chairman and Chief Executive Officer, and standard Harris, Our executive Vice President and Chief Financial Officer.
Earlier. This morning, we issued a press release announcing our financial results for the third quarter ended September 28 2019.
The press release is available on our web company website on our Investor Relations page.
We will begin with our safe Harbor statement.
During the course of today's call. We will make forward looking statements that are subject to risks and uncertainties as described in our press release and in our FCC filings.
You should listen to today's call in the context of that information.
We will also discuss our results for the quarter, primarily on an adjusted non-GAAP basis.
Reconciliations between GAAP and adjusted measures can also be found in our press release.
You can access the release and our forward looking statement language to the Investor Relations section of the company website, where you can also accessed a webcast replay of this call later today.
We'll now turn the call over to Tricia for her remarks on our third quarter results. After our prepared remarks, we will take questions from our telephone participants Tricia.
Thank you Jane and good morning, everyone.
Sales for the third quarter ended in line with our forecasting guidance as the challenging trends, we've been experiencing in Brazil, China.
In Canada persisted.
For the ability was adversely affected by accounting reserves related to our Fuller, Mexico beauty business and adjustments to our tax provision.
I Wonder, we'll talk through the accounting on these non cash items in detail shortly.
We understand that we need to live up to the challenges of being a competitive global business and we need to drive rapid improvement.
We can and we though.
Acknowledge the urgency to address the situation at these large markets as such we're currently in the process of assessing critical aspects of our business and or adjusting our plans for near term action to improve flexibility in cash contain costs and drive profitability.
Now to be clear a mission and angle.
Changed, but we do recognize that we need to stay nimble in our process to achieve those goals given the changing landscape.
No. It's part of our commitment we recently engaged a global prefer.
Professional services firm that has a strong record of revitalizing iconic American brands that have experienced similar challenges to those facing tupperware today.
Through this engagement, we now have access to expertise and resources, we believe will help us prioritize opportunities in how we go to market our cost structure and cash flow management.
Simply put.
Our strategy centers around more access more consumers more sellers.
We plan to continue to invest in and execute on our strategy of expanding our community of both consumers and sellers find revitalizing our core harmonizing our channels and streamlining our business.
My primary objective is to focus our leadership team and being the team that transforms this business to ensure we grow and remain relevant for the next 70 years.
I'd now like to turn the call over to our Chief Financial Officer, Sondra Harris for a deeper discussion of our financials Sandra.
Thank you Trisha.
Reported net sales of 418 million is down 11% versus last year on a local currency basis.
Within our guidance of being down 9% to 11%.
Excluding a 100 basis point impact year over year, and B to B ourselves were down 10%.
We had expected the trends in our largest markets to continue.
With Brazil.
Actually go Indonesia, and U.S. in Canada down approximately 20%.
Well, China was down 10% in local currency.
The four markets down 20% are all struggling to grow the size of their act average active sales force.
Tricia will address the specific actions being taken to revitalize the core in these markets.
In China, the economic slowdown has continued to put pressure on consumer spending in the region, leading to fewer entrepreneurs willing to invest and opening new studios.
Despite this we had 332 new studios added in the quarter.
Additionally, the shift to medium price products continued in the third quarter up around 20%.
And we launched a new college and product during the quarter.
Turning now to profit.
Our adjusted pretax return on sales with 8% for the quarter down from 13% in the prior year as a result of high fixed cost on declining so.
Our pretax return on self guidance of 10% did not anticipate a noncash item related to our Fuller Mexico business.
The Fuller, Mexico beauty business had lower collections and higher cells returns than expected, resulting in increased inventory and accounts receivable reserve impacting earnings per share by 13 cents versus our guidance.
The beauty business in Mexico operates quite differently from our tupperware businesses.
We will consider all strategic actions related to the beauty businesses as we continue to focus on revitalizing the core and streamlining our business.
Another noncash adjustment in the quarter related to the tax provision as prior estimates were updated based upon the filing of our 2018 tax return that was filed in October .
These adjustments resulted from management's continued assessment of the impact of the U.S. tax cut and jobs Act of 2017.
Whereby guilty and beat continues to have significant impacts.
This tax rate change impacted earnings per share by four cents versus our guidance provided in July .
We will be reviewing our tax structure to explore options to potentially minimize these impacts in the future.
Although tax did impact the quarter, we do expect that our full year GAAP tax rate will be lower than the prior year at 36.9% versus 43.6%.
These two items together with four cents worth foreign exchange, primarily drove the P. S. A 43 cents.
Below our expectation of 61 to 66 cents for the quarter.
I mentioned facility were in line with our local currency guidance.
And without these items are operating earnings were on track as well.
We have posted a waterfall chart reconciling our July adjusted earnings per share guidance to actual on the Investor Relations website.
Despite lower net income our operating cash flow net of investing in the third quarter with an outflow of 4 million.
Which is 1 million better than the prior year, mainly due to improvements in inventory.
Turning now to the full year guidance.
Given the trends in our largest market our full year local currency sales decline is now expected to be down 8% to 10%.
Earnings per share is expected to be between $2.77 and $2 an 83 cents.
Primarily due to lower profit on declining cells.
This forecast also includes 10 cents worth impact for foreign exchange than the guidance in July .
Additionally, the for beauty item is expected to have an overall 16 cents negative impact while the tax provision change is expected to be 18 cents worse than July guidance for the four year.
Operating cash flow net of investing is now projected at 65 to 80 million inclusive of an estimated 5 million favorable impact from supply chain financing.
Well, we are actively working on adjusting the cost structure ourselves decline, we have not been able to do it fast enough, resulting in lower operating profit margins in the segment.
When we report the fourth quarter and provide 2020 guidance. We plan to provide you with additional detail on the actions that we need to take to deliver improved near term results profitability and cash generation.
We believe in our long term strategy, but recognize that we need to take quick action to address the current trends in our business.
Before I turn the call back to Trisha.
I'd like to address our capital allocation policy.
In line with the ongoing strategic initiative. The company continues to evaluate the best allocation of its capital to invest cash in the business.
Hey, down debt and return value to shareholders.
With that I'll turn it back over to Trisha. Thank you Sandra.
So our focus throughout the transformation as you know has been on our three strategic pillars of growth revitalizing the core expanding access to harmonize channels and streamlining our structure, let's talk about revitalizing the core we are a direct selling business in our community of sellers is critical to our success.
As such we continue to contemporize, our business model and go to market strategy to ensure we make it easy for consumers to connect without.
We launched a new compensation plan in Indonesia, and the second quarter to make mid to upper level leadership opportunity more attractive and early signs are promising as we've seen a 28% improvement in manager count during the third quarter.
The majority of the K P eyes are moving into right direction. However, sales results are not yet showing year over year grows as we continue to drive behavior change.
We can treat continued our efforts to contemporize the business model in continental Europe by converting stocking distributors to non stocking, which reduces the administrative work for the sales force.
This change has now been communicated to the impact of distributors and the reaction has been in line with expectations.
We are currently on track with 24% of the distributors converted to non stocking as of the ended the third quarter and expect a full transition of continental Europe markets by the end of 2021.
And finally, we have expanded their use of digital tools and the selling process, most notably the launch of Tupperware social in the U.S. in Canada, which enables our sales force to streamline their weekly promotions across all the social media channels and during the quarter, we had almost a million.
Dollars in sales through the new social media and tool and digital sales represent about 5% of our U.S. in Canada sales.
Additionally, we've seen a 40% increase in social media sessions in this quarter.
We've also rolled out the same tool in Germany, this past quarter, and we plan to expand to 13 other European countries seven of those will go live in Q1 2020.
Turning to our efforts around harmonizing and expanding our channels I am excited about the launch of our E Commerce site.
And the U.S. in Canada that we just launched earlier this week.
And in the fourth quarter were planning to launch E Commerce and Etail, both in Brazil, and Mexico. Our team it's been hard at work on this critical component of our strategy and we're making the necessary investments in technology to do exactly that in conjunction with the launch of the U.S. and kind of the website. We are utilizing did.
A little marketing to drive traffic to our revitalize website. So I invite you to go to Tupperware Dot com and check it out we have amazing new tools, there and content, which we're going to continue to enhance.
No last quarter, we shared with you that our digital base was mostly in the U.S., Canada in Germany, and I'm pleased to report that we now have made progress in expanding our online presence this quarter with new E tail channels in India, which include Amazon slip card and pain T M.
And to drive the continued development of our digital strategy I also like to welcome Larry Ruth.
Joined us in late September as our new Vice President of IP and digital technology worldwide. There he has experience in direct selling.
Digital and retail businesses, and we look forward to providing you more updates on our technology driven investments in the coming quarters.
Now turning to our brick and mortar studio strategy at the end of the third quarter, We had about 7100 studios worldwide, including China outside China. Our number of studios are at approximately 400, including 10, New Studios in India, where we recently started expanding this concept.
We're also excited to announce the launch of a new pop up store that we will have in New York City near Soho for the holiday season, it will be a consumer shopping experience that will sell a curated lineup tupperware product via the demonstration provide in store accessed in tupperware, <unk> com, where consumers can show.
The entire range as well that connect with the local representative in their area. So beyond that look out for an invitation.
For an introduction events that will be doing there shortly.
Tupperware its community of 3 million independent sellers across the globe and we are committed to providing products and opportunities that strengthen these communities.
We recognized that our transformation is a continual journey not just the destination and we're working hard to capture the resurgence of our brand with compelling opportunities partners at platforms to introduce our products to new audiences.
And we of course are working hard to revitalize the core harmonize the expansion of new channels and streamline the business to drive value for all of our stakeholders.
And with that we'll now turn the call over for questions Jerome.
Ladies and gentlemen at this time people talk to ask question simply press Star then the number one on your telephone keypad.
Your first question comes from the line of Olivia Tong with Bank of America Merrill Lynch You May ask your question.
Great. Thanks, and good morning, first wanted to start with the interesting news about the launch of E Commerce and U.S. Encana Love to hear I know, it's just started but would love to hear initial feedback from your sales force.
Especially since that had historically been something bad little bit touching in terms of you know trying to make sure that salesforce knew that you weren't trying to leapfrog them in any way.
I love to hear a little bit of feedback from them first thanks.
Sure. Thanks, Olivia fine.
Actually it's a relaunch we'd have ecommerce in the U.S. in Canada for.
15 years or more but the thing that we found with that site is that it was done through the eyes of our sales force members and if you remember we we told you that we were doing a consumer perception study on the site and we did a lot of work and research to understand.
Why weren't we really getting the traffic and the the pull from this site until we've completely revamped this website that so it is very consumer centric and we've taken out all the legal and the language that was very specific to our sales force focusing a much more.
Or on the consumer proposition no of course, you'll also find in there that we are always looking to connect a consumer with the sales force member and so you'll see a lot of language there as well so actually the Salesforce is really excited about this and I'm happy that we've done it before.
'cause, it's much more modern and engaging.
Got it. Thanks, I guess can we drill down a little bit and a couple of your key markets in China, Brazil, and now Fuller, Mexico talk about the initiatives that you have in place in order to remedy some of the challenge is China, we talked about sort of like Downtrading as you know given the macro.
Environment, if she and then now Fuller, Mexico sounds like it's getting a little bit more challenging.
So if you could just to dive a little bit deeper into those three that would be great.
Absolutely, so and I will take a little bit of time to do this this is going to be a a more of a lengthy answer just because we didn't go through a lot of that detail in the in the script and I know these are questions that everybody has so bear with me if you will I'm going to I'm going to drill down on this in a little bit a detail.
So let me first start with China, China in China, we see the slowdown in the consumer spending.
It's still persisting and it's really put pressure on productivity in our studios.
And in addition.
With the worsening economy Theres also more cautious I would say for entrepreneurs to invest in new studios.
So as we look at the sales they were down 10% in the quarter, we did improve slightly the inventory in the outlet with a and we saw a reduction in Q2 remember we commented that that we were going to continue to do that we did it but we're still not really where we need to be but making a bit of progress there.
We also noted in previous quarters that we had slowed the expansion of the studios in order to ensure that we have a healthy future for all the studio owners, we did that and in particular in our most highly penetrated areas, we slowed that down.
But in doing that we were also able to improve the closure rate, which was really the point of doing that to make sure that when we put them in they have the right training and tools and support that they need so to provide them better support so with that we saw an improvement in the closure rate in China.
By 12%.
So what are we doing that we have a you know because with with the trade uncertainties and I'm really hopeful now that at least phase one of this China deal gets gets done and it takes some pressure off.
But we're really focused on.
Recognizing that we have a new reality in China and so we've we've done some things are ready to adjust to that but we're going to take a more aggressive.
Stance in doing that and really urgently move forward number one we've identified new in Underpenetrated geography for more outlet openings.
In addition, we've reduced the initial inventory requirements and therefore, the investment to get into a studio to ease that barrier.
And so will we will continue to control the growth in penetrated areas, but we still have a lot of white space in China. So we feel we can ramp up and and with this.
Easing the barriers to entry there we feel we can still have room for growth. We're also looking at analyzing a change to the compensation plan to spark new growth for 2020 expense should lead to targeted existing owners so to get to that next level of.
Growth for them.
Secondly, we continue to strengthen the new product offering and.
The first it to diversify the price points that we haven't arrange there.
The Q3 mid priced products sales is under said was up about 20% and that's that's good news it can't quite offset the higher priced products, but given the tightness in the economy. It certainly gives consumers more choice and keeps them coming in.
We've also added new categories, So nutritionals launched.
Earlier in the year, but we've really been able to roll it out nationally in Q3, it's really doing well we see good margins from those products as Saunders said, we had a best selling a product this quarter, which was a college and product.
And in the fourth quarter, we're going to launch a brand new high speed Blender, which has never been sold before in our channel.
Number three in terms of what we're going to do there is strengthen the new member outreach we've changed the new member kit for the first time in five years, we've added three new kit.
And two we're going to be added in 2000.
19, and we'll have one more in January and we'll also look to do a recruiting incentive that's going to be launched in December and then finally, we're going to leverage digital and E. Commerce, we're really seeing good results driving traffic to our.
Our E Commerce site and one of the ways. We do this that we see is most impactful is these videos that are owners create and big less amount via we chat on their own channels and it's amazing the engagement, we get there so we're making it easier for them to circle back and.
And actually purchased the product there.
I'll talk a little bit about.
Fuller as well and you know a again here ex the extra those are pretty tough in Mexico, you've heard about fight high fuel prices this diminishing social support.
That's that's happening there and one of the big Big ones is insecurity, there because it's quite a big deal because our sellers are not able to access some of the areas that they used to travel to because now it's too dangerous and they really can't travel at night to go out and do the things they do to either sell their go to me.
Meetings or are those kinds of things. So are for business is more impacted by these kinds of trends first of all because of price of gas in transportation. For example, they have to deliver all the products as opposed to our Tupperware, Mexico business, where we have a distributor ship and people take public strength.
For patients and they go there they pick up their product and and that deliberate on their own.
So we've seen some.
Some.
Challenging trends there in Fuller in terms of really making sure that we get the the sales force activated but with that we are also launching new digital tools, there and you heard that we have.
The new E tail sites and e-commerce sites and Ah that are selling and again to really help the sellers there to do things more digitally.
So we're going to open up those channels for them as well.
And then Brazil.
We have the I would say the combination of a difficult economic and Bob but also we have aggressive competition in the market. So historically, what we've done in Brazil is to recruit career sellers and they're focused on the earning opportunity they tended to only to work for us, but we've seen really quite a number.
Competitors come in there and.
We see a shift to more casual sellers given the tougher economic condition and so what's happening is as we get we recruit people were still able to get a lot of leads a lot of interest but those two.
Potential recruits are having a harder time getting to that first order level and so.
So what normally would have been two orders they kind of combined into one order and so we're finding it hard to qualify them and to really get to the level of sales force that we need we continue to focus on recruiting because with less productivity, we need an even larger sales force.
We do have a in advantage and our salesforce size today and of course, we have new programs in tools for the for the fourth quarter that we're doing there.
We told you last time that we launched the median PR campaign, we did that late.
In the quarter and this has really designed to help our sellers cut through the noise of competition and differentiate ourselves. There. So really we're looking to use this push and pull strategy to support the sellers attract consumers and differentiate from competitors and then.
We're making changes to the promotional approach to see streamline and simplify it we found that we were using a lot of difference.
Materials and different brochures, we're consolidating that and streamlining it to get focused and we really believe that that's going to help us with her margins as well.
We're on track to deliver the technology projects that we have going on there we have a go live from the new Salesforce system in Q1, and we will have our E. Commerce site laws. There in Q4, so sorry for the length of those remarks, but I think there there are things that everybody was interested in so I'll leave.
With that.
Got it thanks for the comprehensive review I'm, just one last one for me and that's on.
Cash flow and capital allocation, because you talked about that sort of priorities for capital allocation, but just talking about cash flow.
Fiscal 19 your expectations are.
Half of where you started the year. So can you talk about sort of the uses of cash Capex obviously.
We'll take a lot of that cash flow.
That new guidance.
Sort of Marianne.
Your thoughts in terms of dividend.
Going forward, Thanks, and that's it for me.
Yes Olivia.
In regard to uses of cash I mean, you've obviously hit on the Capex I mean, we're on target for the years been around 60 million. So that's that's clearly a use of cash and then it a cash flow from the beginning of the year has clearly been impacted by the lower earnings now we do have some positive things that we've been working onto our cash flow.
I mentioned the supply chain financing, we just started that in Q3 in Q4 and expect that to extend into next year.
We also have positive results coming from some of our land sales that we have continued to do to help generate cash in regard to the prioritization of our capital allocation.
Is critically important in light of our current trends are that we continue to invest in this business and if necessary for us to get some near term gains and say we will be focused on that obviously, we also had a commitment to our debt as we've communicated in the past we'd like to be below three with a target of two from our debt perspective.
And then our board will take into consideration all of these prioritizations in deciding whether we will return cash to shareholders in the immediate time period in the form of the dividends or share repurchases.
Yeah, So and I guess I'd also add to that you know as always we discuss the.
The capital allocation with the board and we have a board meeting next week.
[noise] right. Your next question comes from the line as Beth Hi, Red CD, We ask your question.
Wonderful good morning, everyone.
Oh gosh in our though and thank you again to add to Libya said for the.
Description around so many businesses and im going back to the Fuller Mexico.
<unk> prepared remarks, there was a comment made of looking at strategic alternatives for though can you just help us understand why what you meant by by that comment.
Yes, so I guess I would say that were.
As always we consider all the strategic options across our businesses and our portfolio of the brands that we have we look at our go to market strategy things that are going to improve our profitability in our cash position. We always look to see is there an opportunity to streamline to reduce costs.
Yes, so we're always looking at those kinds of things.
And related I guess to that that because the concept of keeping sort of that consumable type part of your portfolio like I would describe perhaps beauty to be and then thinking about Nutritionals did you talked about the success early on in China are you to any sort of any other product.
Launches in other markets sorted outside of the traditional housewares portfolio.
Well I would say what I described in China is probably the best example of that we do have businesses for example, our South American businesses, where we do a variety of different things full there also is a variety of different things I would say, but the most pronounced in China.
China as we launched a small appliances, we have this first one's a high speed blender well look to see how that does.
In China, and then consider options for expanding that to other markets as well and we've been looking at options for other types of those kind of kitchen related appliances as potential for the future.
Great and then if I could shift just about me to that so pop up.
That need to hear about it.
It will be great because they said can you talk much about some of your expectations I assume is it sort of a couple of months endeavor here and is it creates awareness isn't there. Some sales targets is it wrapping gauge that sort of what what would you like to see how does that effort.
Yes, so it's it's going to be November 15th until late December and we're really looking.
To do this for brand image awareness one of the things that we hear a lot and as we you talked to people is people just don't have connection with the brand anymore. They don't really know who we are they don't understand their product line. The kind of have this perception that its bowls and tumblers and and to.
I believe when we talk to people about what what products do we have a new we are in the innovation in our line. They have absolutely no idea and so we really want to get out there we want to put really all these incredible innovations on display we really want to.
Talk also about the new channels that we're opening up and also to highlight our community of sellers and making sure that they understand all the great benefits of being a part of a demonstration and so we'll do cooking.
Demonstrations.
I would imagine just the sites that sounds the smells of all things being associated there and you know because people have this outdated negative perception of the party and the selling method when in fact, it's very relevant and fun and so we really believe we can show cases and create a.
Again this pull for community of sellers to get people excited about what we do.
Got it perfect. Thank you so much.
Thank you.
Your next question comes from the line.
Frank Camma with Sidoti and company you May ask your question.
Good morning, guys how are you doing.
Frank.
First question is big picture question, I mean, I mean, typically you know I always point out the fact that Theres always pluses and minuses to your business given how many markets you are operating in but quite frankly most of the trends are most all of them were negative this quarter I'm just trying to figure out.
Going forward, just big picture basis, where do you see the most positive I guess the most likely.
Positive inflection here in the near term, it's really well I'm talking about when next couple of quarters like where Ricky a push the needle the most with the leverage.
Yes, thanks for that Frank.
Let me, let me kind of addressed that sentiment because you know I sense that people are thinking what's going on here.
With the regions being down let me just.
The.
Be clear that we do have a pulse on on this business and these issues that we're facing around the world. We have a very clear plan to.
That's already in place and the execution is underway as you talk Frank about where we are we seeing the pluses in fact, where we're seeing the pluses is in the markets, where we're doing the transformation work and we're already starting to see some improved results through good trends in the Capesize. Now. These are some of the smaller markets. So theyre not.
And having.
The impact that we expect to see because.
As we look to okay. What's changed since we since we started out on this transformation journey, what's really trend change is more the trends in the larger markets.
When we set this plan in motion, Brazil, China, U.S., Canada were all growing well and you know I talk through the specifics.
On all those markets.
Through that again, but clearly those are the things that have change the externals in Brazil in China. Some of the competition. The U.S., maybe I'll I'll touch on a little bit I didn't talk about that one the U.S. was I would say more self inflicted on that with poor execution on the new.
Qualifications and.
And so we.
We realize what what's happened there with the new qualifications and we didn't communicate that well that launched earlier in the year. We now have a new leader there who's quickly assess the situation we've already made adjustments.
Because the qualifications, we put in place were too rigid.
So, we're providing a bit more flexibility not reducing the standards, but just more flexibility. There. So that was kind of self inflicted and and I feel it's something that with the new leadership the new approach that we can get moving quickly.
So we have this new reality to deal with given some of the changing market conditions and founder said, we acknowledge where we already have the sense of urgency that needed to address that situation and identifying those.
Critical aspects that we can.
Leverage in the near term and we're just moving to drive the effects successful execution of the strategy and also looking to streamline the structure. So I think with a focus on that now in the fourth quarter in terms of the bottom line I think we can have some wins there.
And one thing it does that go on a positive is is the sales force positive.
Youre on both the active and the total Salesforce, maybe I missed it but can you just comment.
Why you saw that trend, particularly in both active and total.
It doesn't happen I think going along.
Yeah exactly thank you for that you know I as I said, we have now gone out in spoken with all the distributors that are going to be impacted and we've shared with them the plan and what's going to happen.
25% of the way through it but I think that.
Situation in Europe has been deteriorating for years and years and although you do have some distributors that may want to stay.
With the way things are many many are not happy with the way things are today. So we're happy to know we have a plan that we're doing something and you know, it's it's not smooth sailing but they are hopeful some of them are hopeful I would say and.
You can get when when people have the plan to have hope they see the future. Then you start to get them excited about getting re energized in their business and really that's all we've done is to bring energy to that business.
On the in making sure that people know get share the share the opportunity get excited about what you do and I think just bringing that energy back.
Has has really driven the the I would take improved results in Europe .
Great. Thanks, guys.
Thanks.
Your next question comes from the line as a drug Boggling Web link research you May ask your question.
Oh, Thank you I'm good morning, everybody.
Can you step back and they help me with the longer term strategy behind studio expansion outside of China, particularly how that compares to the attrition traditional party plan that you used in the past and how does that impact your ability to recruit new people into the sales force.
Yes. Thank you for that you know the studio strategy is something that continues to evolve and we continued to branch this out into different countries. So at the moment, we have two different.
Model, if you will with the studio strategy one being in line more with the China approach, where you have an independent entrepreneur that has the studio and it's more a retail demonstration kind of environment. If you will but that entrepreneur is really just.
Running and operating their own studio, they're not necessarily building.
A team of independent sellers outside studio.
So that's the model.
That.
We have in China and that we are looking for other opportunities in Asia as well in particular and.
Then as opposed to the U.S. model, where we say you have to grow your business to a certain level and when you get to be nearly a million dollar business. Then you can have a studio.
And you build the team out from that and so we really have those two different things and and we're working to find what's the right mix of that because both offer incredible opportunities. Obviously, if you'd have a team of sellers that you're working with you can take the demonstration out of the studio in into the home if you only.
Have a studio then you're limited in terms of the number of people who are going to come in or the number of demonstration you can sell so how to harmonize those two things and we have a mix of different things happening in different markets, but what are the things that we see regardless of the model is having this visibility in this location.
It is absolutely a plot that we see.
Those who are in a studio versus those who are not in a studio.
The Billy helps them and we're seeing double digits improvements and in fact, we see.
In those markets, where where we do have the salesforce, they actually drive that recruiting numbers up double digits as well so it's really been interesting for us.
See that and to build that out having said that we also see that it's it's a lot to handle for a leader in that studio to.
To be able to do so we're trying to get more descriptive for them on the things they should do not do in order to make sure that weekend.
So growth.
That's very helpful. I guess I know, it's really early days on that but do you have any kind of longer term thoughts on number of studios you want globally or what percentage of your sales come from studios globally, where you just not that far long yet.
But we have said that we are our goal is to have.
Thousand Studios I think we said by the end of 2020 I'll have to verify that but it was 1000 studios.
By the end of 2020 checked the timing on that.
But you haven't articulated what percentage of your total business is going to go through studios.
We haven't.
Okay. Thank you.
Thank you.
So no question at this time I'll hand, the call back to Tricia Stitzel Chairman and CEO .
Great. Thank you Jerome.
Despite our current headwinds and the challenges that we face we acknowledge the urgency to address them and we're currently in the process of assessing all these critical aspects of our business and we are.
Adjusting the plan I would say in the near term to really focus and improve our flexibility our cash contain costs and drive profitability.
While at the same time driving the strategies.
In our transformation and continuing to progress that you can see that we've already made in the third quarter. So we look forward to sharing our progress with you and the result in the coming quarters and thank you for joining us today and again I just invite you to go to Tupperware Dot com check it out and the on the look out for an invitation to.
Our pop up event. Thank you everyone. We appreciate your time.
Thank you again Bakken crude Tupperware brands Corporation third quarter 2019 earnings Conference call you may now disconnect.