Tupperware, an American manufacturer of food storage containers, has declared it may go bankrupt unless it can rapidly get new finance. There was a "substantial doubt about its ability to continue as a going concern," said the 77-year-old company.
Tupperware has been trying to appeal to a new generation of consumers, but the effort has yet to be successful.
On Monday, April 10, its stock dropped about 50%, but by the next day, it had recovered somewhat with a gain of 5.6%.
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In the 1950s and 1960s, the company skyrocketed to fame as housewives hosted "Tupperware parties" to promote the sale of the brand's food storage containers made from plastic, as reported by BBC.
Tupperware continues to market its wares via a direct sales force, with representatives earning a commission on purchases made through its website.
To reach a younger demographic, it has lately begun selling its items through the American retail chain Target and other shops across the globe.
It has also branched out into kitchenware, such as a microwave-safe grill. Tupperware's then-CEO Miguel Fernandez (one of three in five years) envisioned the grill as a solution for those who live in urban areas where outside cooking is impractical.
What Went Wrong?
Neil Saunders, general director of retail at the consultancy GlobalData, argued that Tupperware has failed to move with the times regarding its goods and distribution.
He said that Tupperware's direct sales model, which relied on home parties, was not resonating with younger consumers and that even those who remembered Tupperware in its prime had moved on since they could get comparable containers elsewhere for less money or with a more current aesthetic.
Tupperware, however, said in March that the number of direct salespeople working for the company had decreased by 18% in 2022 compared to the previous year. Covid-19 lockdowns in China, which limited access to goods, also had an effect.
While Tupperware was revolutionary when first introduced, Saunders said contemporary competitors are more creative and fashionable.
He also noted that younger consumers have been more receptive to eco-friendly options, such as beeswax paper, for preserving food.
Early Warnings
Tupperware's stock price rose as more individuals started making their own meals at home after the Covid epidemic, but the company has faced declining sales ever since.
Tupperware issued a letter warning investors that the company had not yet submitted its annual report and risked having its stock delisted from the New York Stock Exchange.
After modifying its loan arrangements three times since August 2022, it reportedly put out a notice that it will need to renegotiate them. Tupperware said that the company was experiencing difficulty repaying its debt due to rising interest rates.
The firm has thus decided that there is a serious question about its capacity to continue as a going concern since it now predicts that it may not have enough cash soon.
The firm has been consulting with financial experts to raise capital. The possibility of liquidating assets and reducing headcount is also being considered.
