77-year-old Tupperware may go out of business, warns company

The options from Tupperware Brands (TUP.N) appear to be less airtight. The maker of reusable plastic containers, founded in 1946 by chemist Earl Tupper after being inspired by the design of paint can lids, claimed “substantial doubt” about its ability to continue as a going concern on Friday, sending its stock down 48% on Monday. As with other direct-selling enterprises, it raises questions about its business model and how quickly it can reinvent itself as customer preferences change.

Tupperware was a staple of American parties and picnic

Since Tupperware was a staple of American parties and picnics, a lot has changed. Covid-19 was a windfall for the company: its earnings more than doubled in the third quarter of 2020 as locked-down home cooks cranked up recipes. However, the revival of dining out means that there is less room for leftovers. Manager Miguel Fernandez feels the company is entering a promising “new post-pandemic phase,” yet the company is cash-strapped. Tupperware’s creditors may argue that the company has violated its debt covenants due to an earnings misstatement that has caused it to be late in filing its annual report.

Even if Tupperware can pacify its creditors or find new investors, the advent of e-commerce has hurt enterprises that rely on direct marketing. In 2019, for example, cosmetics company Avon agreed to sell itself to Brazilian conglomerate Natura (NTCO3.SA). Tupperware distributes its products in roughly 70 countries through approximately 3 million independent sales members. Customers now have more options for food storage, more places to buy from, and less time for Tupperware parties than in the company’s heyday. As a result, the renowned brand is becoming increasingly constrained.

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