Tupperware, the US maker of food storage containers, has warned it could fail unless it urgently raises new sources of funding.
The 77-year-old company announced in a statement that there are “substantial doubts” about its ability to continue as a business.
Tupperware has tried to reposition itself to appeal to a younger audience, but has been unable to stem its declining sales.
On Monday, the company’s share price saw a nearly 50% drop before recovering slightly on Tuesday.
The “Tupperware parties”
The company became known in the 1950s and 1960s for so-called “Tupperware parties” held at private homes to sell famous plastic containers for storing food.
Tupperware still uses a direct trade workforce – where people earn a percentage of all the containers they sell – in addition to selling products on its website.
It recently began selling its products at the US retail chain Target as well, seeking to attract younger shoppers and other similar retailers around the world.
In addition, it has expanded its product range into kitchen utensils, designing items such as a microwaveable grill.
Miguel Fernández, Tupperware’s third CEO in five years, said he envisioned the grill as a product “for someone who lives in a New York apartment and can’t go out and cook on the grill.”
“Products and distribution” problems
Neil Saunders, managing director of retail sales at consultancy GlobalData, said Tupperware “failed to keep up with the times in terms of its products and distribution.”
Saunders noted that the method of direct sales through Tupperware parties “doesn’t connect” with younger customers and that even older customers who “remember Tupperware in its heyday” have evolved.
Thus, customers choose to buy cheaper or fashionable containers both in stores and online.
Younger customers have also been drawn to more environmentally friendly, reusable products such as beeswax paper for their needs to keep food fresh.
And while Tupperware reported a slight increase in sales during the pandemic, when people were cooking at home, it was a short-lived rise.
The fall of a great
Tupperware said in a statement in March that by 2022, its direct seller workforce is down 18% from a year earlier.
The company was also affected by the lockdowns in China due to the covid-19 pandemic, which severely disrupted access to all kinds of products.
The firm added that its shares were in danger of being delisted from the New York Stock Exchange because it had not yet filed its annual report.
And he warned that he will have to restructure his debt a third time, after having already had to do it twice since August 2022.
For Tupperware, the challenge is fighting rising interest costs on its loans while trying to improve business.
Given this scenario, the company admitted that “it currently foresees the possibility of not having adequate liquidity in the short term” and added that its continuity is at risk.
An uncertain future
Just a month ago, Tupperware’s financial director, Mariela Matute – who joined the company in May of last year – said she was calm about the company’s short-term future: “We are confident that we will be able to operate without any substantial doubt in 2023”.
But in its statement, Tupperware said its 2021 and 2022 financial results – as well as its interim 2021 figures and those for the first three months of 2022 – were misrepresented because of the method used to account for company taxes and leases. company.
Because of this, Tupperware’s stock value rose 5.6% on Tuesday, after plunging 50% on Monday.
The company said it is working with financial advisers to secure more money and investment. He also said he is looking at whether he can sell property and cut jobs.
But Saunders expressed doubts that Tupperware will be able to do enough to turn the tide at this point.
He said that if the company had implemented changes – such as adopting retail or wholesale – 10 years ago, it would not be where it is today.
However, he also underscored that the brand is still widely recognized, and could attract the attention of a retail giant like Walmart, or even someone like Amazon.
the beginnings
Tupperware was founded by Earl Tupperan American chemist, in 1946.
Its hermetic polyethylene products – airtight and waterproof thanks to their double-sealed lid – began to be sold in department stores, but they did not achieve the expected success because customers had problems using them.
People were used to glass and ceramic products, and this new Tupperware container had to have the air removed in order to seal it.
A woman named Brownie Wise, who was already selling cleaning products at house parties, began to trade Tupperware products as well.
She used demos to attract customers and recruited other salespeople to help her.
Tupper ended up hiring Wise, which helped fuel the growth of the business through house parties, which in turn allowed many women to generate income.
But the founder and his vice president are believed to have clashed over company strategy and in 1958, Tupper fired Wise. She sued the company and received a year’s wages in compensation.
Tupper would end up selling the business afterwards.