Tupperware Brands boxes itself into a corner

TORONTO, April 10 (Reuters Breakingviews) – Tupperware Brands’ (TUP.N) options are looking less airtight. The U.S.-based maker of reusable plastic containers, which chemist Earl Tupper founded in 1946 after taking inspiration from the design of paint can lids, cited “substantial doubt” on Friday about its ability to continue as a going concern, sending its share plummeting 48% on Monday. As with other direct selling companies, it casts doubt over its business model, as well as how speedily it can remake itself as consumer habits shift.

A lot has changed since Tupperware was a mainstay of American parties and barbecues. Covid-19 was a boon to the business: Its earnings in the third quarter of 2020 more than quadrupled as locked-down home cooks whipped up recipes. But the resurgence in dining out means less room for leftovers. Boss Miguel Fernandez now believes the company is entering an encouraging “new post-pandemic phase,” but the company faces cash constraints. An earnings misstatement, which has left it late in filing its annual report, could cause creditors to declare Tupperware has violated its debt covenants.

Even if Tupperware can appease its creditors or find new investors, the rise of e-commerce has dented the fortunes of companies that lean on direct selling. Cosmetics firm Avon agreed to sell itself to Brazilian giant Natura (NTCO3.SA) in 2019 for instance. Tupperware relies on some 3 million independent sales members to distribute its products into nearly 70 countries. Compared with the company’s heyday, customers have more options for food storage, more places to buy from, and less time for Tupperware parties. That leaves the iconic brand increasingly boxed in. (By Sharon Lam)

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(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.

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