Tupperware, the well-known maker of food storage containers, is in danger of going out of business if the company cannot raise new financing, according to a Friday press release from the 77-year-old firm.
When the markets reopened on Monday, the effect of that warning was felt in Tupperware’s stock price, which plummeted by nearly 50 per cent.
The company earned a reputation in the 1950s and 1960s as an innovator of kitchen solutions, when it introduced its plastic, air-tight food containers and began marketing them through “Tupperware parties” directly in consumers’ homes.
But in today’s economy, the company has struggled to attract younger customers and distinguish itself amid a much more crowded market. The rise of e-commerce has also been a blow to companies that employ a direct sales force, like Tupperware and cosmetics company Avon, made up of representatives who earn commissions from the goods they sell.
In an effort to modernize its business model, Tupperware struck a deal last year with Target, the U.S. retail chain, to sell products in their stores, but it seems the measure may have been too little, too late.
On Friday, Tupperware released a regulatory filing that reported there is “substantial doubt about the company’s ability to continue as a going concern.” (A going concern is an accounting term that relates to whether a company can survive the next 12 months.)
Tupperware warns it will not have enough capital to continue operations if it doesn’t secure a new source of money, the release states. The company is working with financial advisors to reorganize and stay afloat.
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The company is considering laying off workers and selling assets in its real estate portfolio, among other measures, to generate liquidity.
“Tupperware has embarked on a journey to turn around our operations and today marks a critical step in addressing our capital and liquidity position,” CEO Miguel Fernandez wrote in the press release. “The company is doing everything in its power to mitigate the impacts of recent events, and we are taking immediate action to seek additional financing and address our financial position.”
As a result of the financial turmoil, Tupperware was unable to file its required annual report to the Securities and Exchange Commission (SEC) on time, meaning it’s in danger of being de-listed from the New York Stock Exchange (NYSE).
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The NYSE sent a formal notice to the company on April 3, warning that Tupperware has six months to file the required paperwork to regain compliance with the stock exchange, or the delisting process may begin.
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Tupperware writes that it currently expects to file the required report with the SEC “within the next 30 days,” but it can offer “no assurance.”
When the Tupperware company first began in 1946, founded by American chemist Earl Tupper, its journey to success started off with a few bumps in the road. Initially, the containers, with their patented “burping” seal, were sold in department stores — but consumers used to using glass and ceramic jars didn’t know how to use them.
Then a saleswoman named Brownie Wise, who was already selling cleaning products at parties, added Tupperware containers to her roster and provided demonstrations to her guests on how to use them. Eventually, she was hired as a vice president at Tupperware and ran the Tupperware parties operation.
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