Tupperware Brands Corporation (NYSE: TUP), owner of the iconic food storage brand Tupperware, has filed for Chapter 11 bankruptcy protection. The filing comes after years of financial struggles despite a pandemic boost when many were under lockdown orders, leading to an increase in people cooking at home. Here’s what you need to know about Tupperware’s bankruptcy.
The reason for Tupperware’s bankruptcy
Many reasons typically lead a company to the point of bankruptcy. In a press release announcing the filing, Tupperware blamed a “challenging macroeconomic environment” for “severely” impacting its financial position.
When companies blame the “macroeconomic environment,” they are pointing to broader factors that most companies suffer through, such as rising costs due to inflation, undesirable interest rates, and hesitancy from consumers to spend on discretionary items as a result.
But if you look at the bankruptcy petition that Tupperware filed with the the U.S. Bankruptcy Court for the District of Delaware, the company gets more specific about the factors behind its financial woes.
Notably, Tupperware says the main sales channel that it has relied on for decades—getting independent consultants, which the company calls its “Sales Force,” to sell Tupperware’s goods directly to their friends, colleagues, and communities—doesn’t work as well in the 21st century as it did in the 20th.
“The historical strengths of a widespread direct selling model began to turn into weaknesses,” the company wrote in its bankruptcy petition. “The Company’s focus on its direct sales model ultimately came at the cost of developing an omnichannel strategy, or even modern e-commerce infrastructure to support its Sales Force.”
A lack of a strong online presence
Tupperware said that nearly 90% of its sales came via its direct sales channels in 2023. That’s an astonishingly high figure, especially considering that e-commerce has been a thing since the 1990s.
Yet Tupperware did not readily start embracing e-commerce until the 2020s. It wasn’t until June 2022 that Tupperware opened up a storefront on Amazon.com. In October of the same year, the company began selling its wares on Target.com.
To say Tupperware was late to the game in selling via two of the biggest online retailers in the United States is an understatement.
So what does Tupperware do from here?
If a judge approves the bankruptcy petition, Tupperware will implement its turnaround strategy. Tupperware says it plans to keep selling its goods throughout the bankruptcy proceedings via its Sales Force, online, and in retail stores.
But the company says it will also seek approval from the court “to facilitate a sale process for the business in order to protect its iconic brand and further advance Tupperware’s transformation into a digital-first, technology-led company.”
The company does say what it means by “digital-first, technology-led,” but presumably it entails, in part, a strategy to make online sales a bigger slice of its revenue pie.
Online competition is fierce
Tupperware faces and will presumably continue to face existing challenges in online marketplaces.
In its court filing, Tupperware revealed that even after it opened its Amazon storefront, when a customer searches for “Tupperware” on Amazon.com, the site “presently return[s] results for other brands, undercutting the Company’s strategic purpose for selling on Amazon.”
(Searches for “Tupperware” on Amazon.com currently bring up plenty of results for Tupperware products but also sponsored products for competitors like Rubbermaid.)
Tupperware says a key pillar of its turnaround plan “is to increase the Company’s focus on marketing and advertising to capture this existing demand and to generate further sales.”
Tupperware Brands Corporation was founded in 1938. The company’s stock trades on the New York Stock Exchange under the ticker “TUP.” The stock’s all-time high was above $74 per share in April 2017.
As of the time of this writing, TUP stock sits at below 51 cents per share. Year-to-date Tupperware stock is down over 74%.