Please ensure Javascript is enabled for purposes of website accessibility

Why Shares of Tupperware Are Plunging Today

By Lou Whiteman - Updated Feb 25, 2020 at 11:13AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

An earnings delay and a bleak outlook for 2020 have investors heading for the exit.

What happened

Shares of Tupperware Brands (TUP -0.83%) fell more than 35% on Tuesday after the maker of food storage, kitchen, and beauty products delayed the full release of its year-end results. The stock has now lost about 88% of its value over the past year, and the company's outlook for 2020 gave investors little to get excited about.

So what

In a statement Tuesday, Tupperware said it was investigating "financial reporting issues" in its Fuller Mexico business, as well as finalizing its tax rate, and as a result will not be holding its earnings call as scheduled. The company, which in October warned that its full-year results would come in below expectations, said it expects 2019 adjusted earnings per share between $1.35 and $1.70, well short of the $2.78 per share consensus expectation.

A pantry full of food storage containers.

Image source: Getty Images.

Tupperware blamed "continued execution challenges and unfavorable macroeconomic trends" in Brazil, China, and North America for the miss.

"We are working rapidly to address these Fuller Mexico issues in order to finalize our 2019 results," interim CEO Chris O'Leary said. "We are also focused on facing the clear headwinds in our core markets and accelerating the pace at which we can achieve meaningful improvement in the business."

O'Leary is serving as CEO while the company finds a permanent replacement for Tricia Stitzel, who resigned in November.

Now what

Tupperware expects to generate revenue between $1.58 billion and $1.62 billion in 2020, shy of the $1.67 billion analyst consensus, due to "current business trends and foreign currency rates." Tupperware said it expects the first half of the year to be difficult, with better sales trends expected by the second half of 2020 as some of its streamlining initiatives take effect.

Based on this outlook, Tupperware warned it could have issues meeting the required leverage ratios on its $650 million credit agreement. At worst, that could cause an accelerated payment of the debt, which Tupperware said, "could have a material adverse impact," though the company will seek relief from the covenant if necessary.

The shares are a lot more inexpensive now than they were a year ago, but that doesn't make this stock a bargain. Tupperware right now has an uncertain future, and at best the company is going to need some time to dig out of the mess it is in.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Tupperware Brands Corporation Stock Quote
Tupperware Brands Corporation
$6.00 (-0.83%) $0.05

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/23/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.