Tupperware party’s cancelled. Management pulls full year guidance; analysts wrong footed

Most of us know Tupperware. It’s an iconic brand marketing storage and serving containers for use in the kitchen and around the home.

The company is well diversified. Although it’s a US business, Asia-Pacific was the biggest region in 2021 accounting for 28% of revenue. North America and EMEA (Europe, Middle East and Africa) are of similar size, followed by Latam.

The company has high gross margins and traditionally used a direct sales model.

Predictable you might think? Certainly analysts surveyed by the Financial Times thought so, almost all rated the stock as a ‘buy’ or ‘outperform’.

That was before last week’s Q1 earnings call, then the company revealed sales fell 16%, far below analysts’ estimates. The killer was Management’s decision to pull full year guidance, adding ‘fixing operations’ would take ‘longer than expected’.

Open Tupperware’s lid, and as far as I can ascertain, the biggest issue is the RTM model. (Route to market)

“With lower-than-expected contribution from our direct selling business in the quarter, our profitability was dramatically affected.

Tupperware Q1 2022 Earnings Call

Historically Tupperware has been a direct sales business. In India for example the company has 1.5m direct sellers.

However, over the last couple of years, Tupperware has been switching to launching more of its own stores, developing a ’social selling channel’ (i.e. a direct EC business), entering B2B channels and working with large key account retailers.

Nothing wrong with these initiatives. I suspect the issue is retaining engagement and motivation from the traditional direct sellers whilst this transition takes place.

The only market which has performed well for Tupperware is Mexico. Why? They added more direct sales staff, said management on the earnings call.

During the call, Tupperware’s CEO admitted the company is in discussions with other trade partners, conceding they will probably launch with a retail partner in the UK Q4 2022.

In Malaysia for example they’re already working with Aeon.

Aeon Malaysia Tupperware programme

Managing big retailers is a new world for Tupperware and Management acknowledge they have been busy staffing up.

Staffing is one challenge. Another is profitability; securing shelf space in big box retailers does not come cheaply.

Tupperware doesn’t attribute all its woes to its RTM. Rather it points the finger at the Ukraine war and rising resin prices.

After the results were released, the stock closed just above $12, a precipitous drop from December 2020 when it traded over $32.

Are the days of the Tupperware party numbered?

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