May 6, 2022 - Economy

Tupperware's party of one: Direct selling brand seeking turnaround

Illustration of three Tupperware containers curved to form a sad face

Illustration: Annelise Capossela/Axios

It’s been a long time since Tupperware had something to party about.

What’s happening: The food storage product seller — known for Tupperware parties held by thousands of direct sellers — revealed a slew of problems earlier this week, leading investors to lose confidence in its turnaround plan.

  • Its stock plunged more than 40% in the last five days to about $10, as the company deals with lockdowns in China, inflation, execution problems, effects from the Russia-Ukraine war and technology issues, among other things.

Why it matters: The company’s numerous challenges revolve around its over-commitment to direct sales long after big-box stores and digital retail took off, illustrating the risks in not adapting fast enough to a new business model.

  • Sales in 2021 totaled $1.6 billion, down 40% from their all-time high of $2.67 billion in 2013.
  • About 80% of the company’s sales come from direct selling channels, spokesperson Cameron Klaus tells Axios.
  • “Tupperware parties are an iconic thing,” Lane Research principal Doug Lane, who tracks Tupperware’s stock, tells Axios. “The whole challenge with Tupperware is to expand beyond that.”

What’s next: Tupperware is trying to break out of its box.

  • In April 2020, the company hired a new management team, including CEO Miguel Fernandez, with a plan to diversify its sales model.
  • That will culminate in a plan to sell Tupperware products at retail stores throughout the U.S. for the first time beginning later this year.

What they’re saying: “In the digital age, after multiple years of sales declines, it became clear we needed to evolve to offer consumers ways to reach our products in the ways they choose to shop,” Tupperware's Klaus said in an email.

Yes, but: It could get worse before it gets better.

  • COVID lockdowns in China crushed the company’s sales in March — and those lockdowns have gotten worse since then.

What we’re watching: How quickly Tupperware can transition away from its reliance on old-fashioned sales tools like physical catalogs, which have made it difficult for the company to increase prices quickly enough to keep pace with inflation’s four-decade high.

  • “Much of our business still relies upon physical printed catalogs, which are printed only a few times in a year in many markets, causing changes to be slow,” CFO Cassandra Harris said Wednesday on a conference call.
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