Tupperware Bankruptcy? Understand the crisis and the fall in stocks – 04/11/2023 – Market

Tupperware, the US maker of food storage containers, has warned it could go bankrupt unless it can quickly access new lines of credit.

The 77-year-old company said there were “substantial doubts about its ability to continue operating”.

Tupperware has been trying to reposition itself to a younger audience, but it hasn’t been able to stop a slump in sales.

Its shares fell nearly 50% on Monday (10), before recovering slightly this Tuesday (11).

The company first became known in the 1950s and 1960s when people across the US held “Tupperware parties” in their homes to sell plastic food storage containers.

Tupperware still employs a direct sales team — who earn a percentage of all products they sell — in addition to selling products on their website.

It recently began selling its products at US retail chain Target, in an attempt to attract younger shoppers, as well as to other retailers around the world.

It also expanded its line to culinary products, such as a grill that works in a microwave oven.

At the time, Miguel Fernandez, Tupperware’s chief executive — its third in five years — said he envisioned the grill “for someone who lives in an apartment in New York City and can’t barbecue outside, but can use this.” .

However, Neil Saunders, managing director of retail at consultancy GlobalData, said Tupperware “has failed to change with the times in terms of products and distribution.”

He said Tupperware’s method of selling direct to younger customers through parties “wasn’t working” and that even older customers who “remembered Tupperware in its heyday” have moved on—they can now buy more containers. cheaper or more elegant in physical stores or online.

Meanwhile, Tupperware said in March that its direct seller workforce has shrunk by 18% in 2022 compared with a year earlier. The company was also impacted by the Covid-19 pandemic lockdowns in China, which affected consumer access to products.

Saunders also said that Tupperware — while considered innovative for many years — may not be as inventive and stylish today as other brands, such as Joseph Joseph, the homeware design company founded by twin brothers Antony and Richard Joseph.

Younger customers have also embraced more environmentally friendly products, such as beeswax paper to keep food fresh, which can be used over and over again, he said.

In a statement, Tupperware said its shares were at risk of being delisted from the New York Stock Exchange because the company had not yet filed its annual report, one of the prerequisites for listing.

It also warned that it had to renegotiate its loans after already changing its loan agreements three times since August 2022.

Tupperware also said it is struggling with higher interest costs on its loans as it tries to turn around the business.

The company said it “currently anticipates that it may not have adequate liquidity in the short term” and added that it “has therefore concluded that there are substantial doubts about its ability to continue operating”.

Just a month ago, Tupperware CFO Mariela Matute, who joined the company in May last year, told investors, “We are confident that we will be able to operate without substantial doubt in 2023.”

Additionally, Tupperware said its financial results for 2021 and 2022, as well as its interim numbers for 2021 and the first three months of 2022, were “incorrect” due to the way the company accounts for taxes and rents.

Tupperware’s share price rose 5.6% on Tuesday after falling nearly 50% on Monday.

The company said it is working with financial advisors to secure more liquidity. It is also examining whether it can sell properties and cut jobs.

However, for Saunders, from the consultancy GlobalData, this is no longer possible.

In his view, if the company had made changes ten years ago, such as selling in stores or wholesale, it might be in a different position now.

He points out, however, that the brand name is still well known, and the company could appeal to a retail giant like Walmart —which owned Asda— or even Amazon, to remain operational.

Tupperware was founded by Earl Tupper, an American chemist, in 1946.

Airtight, waterproof polyethylene products —with a double-seal lid—were sold in department stores, but they weren’t immediately successful because potential customers didn’t know how to use them—they were used to glass and ceramic products. .

It was then that a salesperson named Brownie Wise — who already sold cleaning products door-to-door or house parties — started selling Tupperware herself.

She used home demonstrations to find customers and recruited other salespeople to sell the products.

Wise was eventually hired as Tupperware’s vice president of marketing by Tupper himself, helping to drive the business’s growth through parties that also allowed women to earn an income.

However, Tupper and Wise reportedly clashed over the company’s strategy, and in 1958 Tupper fired Wise. She sued the company and won a year’s salary. Tupper ended up selling the business.

This text was originally published here.