After Tupperware Brands Corporation warned it could soon go out of business, the iconic company’s failure to adapt to modern trends and attract new customers has been in the spotlight.
Once a mainstay at American parties and backyard barbecues, Tupperware containers became famous for the company’s direct sales model and “Tupperware parties” held at vendors’ homes.
While Tupperware sales rose briefly during the COVID-19 pandemic, as families prepared more home-cooked meals during the lockdown, the trend reversed sharply last year as dining in restaurants boomed again.
On Friday, Tupperware announced that it has “substantial doubts about its ability to continue operations” in the face of a cash crisis and creditor pressure after errors in its financial statements prevented the company from making a timely statement. submit an annual report.
Experts say financial missteps, the decline of the direct sales model in the age of e-commerce, and the rise of low-cost alternatives — including reusable packaging from food deliveries — may have all played a role in Tupperware’s demise.
Tupperware sales have fallen since peaking in 2013. A rise in sales during pandemic lockdowns sharply reversed last year and the company faces insolvency
Dixie Longate, Kris Andersson’s drag persona, has long been one of Tupperware’s bestsellers, combining comedic routines with actual product sales
Linda Bolton Weiser, general manager and senior research analyst for consumer products at DA Davidson, told DailyMail.com that Tupperware was not investing enough under former CEO Rick Goings.
“They were especially short on IT investment,” says Bolton Weiser, pointing out that the company’s free cash flow instead went toward high dividends for shareholders.
Goings led the company from 1998 to 2018. Tupperware suspended its quarterly dividends in 2019 after paying a whopping 8.4 percent yield.
“They’ve also failed to get the fundamentals of their direct selling business in order,” added Bolton Weiser, who officially ended coverage of Tupperware’s stock last week.
Launched in 1946 by entrepreneur Earl Tupper, Tupperware has long relied on the direct sales model, where individual sellers buy the company’s product and then sell it door-to-door or at nearby Tupperware parties.
In the 1950s and 1960s, Tupperware parties and the company’s iconic food containers exploded in popularity, and the company expanded internationally, selling in some 100 companies at its peak.
But over the years, the direct selling model has generally suffered from the rise of e-commerce, and companies that rely on an army of individual neighborhood sellers have been forced to rethink their business model.
A Tupperware party can be seen in the UK in 1963 as the food parcels boomed overseas
A Tupperware salesperson is seen with the company’s products in 1989
Former Tupperware CEO Rick Goings ran the company from 1998 to 2018. An analyst criticized the company for not investing during his tenure, instead paying large dividends.
For a long time, Tupperware mainly focused on direct sales through nearby Tupperware parties and online sales through its own website, but started selling on Amazon last June.
In October, Tupperware also partnered with Target to put the food containers on store shelves, but it doesn’t seem the new sales channels are enough to save the company.
Bolton Weiser argued that Tupperware’s shift into retail has been scattered, saying, “They’ve had too many initiatives to diversify away from direct sales, which required too much investment, such as selling through mainstream retail channels.”
Others note that Tupperware faces stiff competition from alternatives such as Rubbermaid, Glad, Ziploc, and even the reusable containers of food takeout and delivery orders from the likes of DoorDash and Grubhub.
“I don’t know about you, but I just keep my takeout containers and reuse them,” said Yahoo Finance anchor Julie Hyman in a Monday broadcast.
Neil Saunders, retail analyst and managing director at GlobalData Retail, said CNN that a “sharp decline in the number of sellers, a consumer pullback to home products, and a brand that still doesn’t fully connect with younger consumers” were all problems Tupperware faced.
He said the company is in a “precarious position” as it struggles to grow sales and being “asset-light” means it is difficult to raise money.
“The company used to be a hotbed of innovation with problem-solving kitchen gadgets, but it’s really lost its edge,” he added.
Tupperware CEO Miguel Fernandez said the company has “started a journey to change our business”
The iconic brand sees its market dominance threatened by competition from other popular brands, including Rubbermaid, Glad, Pyrex and Oxo
Shares of the company last traded Tuesday morning at $1.30, down 48 percent from a week ago and down 93 percent from a year ago
A Tupperware spokesperson did not immediately respond to a request for comment from DailyMail.com Tuesday morning.
Tupperware’s dire situation came to light in a filing Friday, in which it said it was in the process of finding funding to stay in business but would not have enough money to fund its operations if it didn’t. .
The company is reviewing its workforce and real estate portfolio as cost-cutting options, it said.
CEO Miguel Fernandez said in a statement: “Tupperware has embarked on a journey to turn around our business and today marks a critical step in addressing our capital and liquidity position.”
“The company is making every effort to mitigate the impact of recent events and we are taking immediate action to seek additional funding and address our financial position.”
Tupperware is also struggling to avoid being delisted after the New York Stock Exchange issued a warning for failing to file an annual report by its March 31 deadline.
Shares of the company last traded Tuesday morning at $1.30, down 48 percent from a week ago and down 93 percent from a year ago.