What happened
Shares of Tupperware Brands (TUP -2.86%) were up 30% as of 12:30 p.m. ET on Wednesday after the company reported better-than-expected earnings results for the second quarter.
Sales were still down 14% on a constant currency basis, but the market was pleased with the sequential increase in profit versus the last quarter. Tupperware reported adjusted earnings per share from continuing operations of $0.41, which was down from $0.90 in the year-ago period, but an improvement versus the $0.12 reported in Q1.
So what
Tupperware is dealing with major challenges in the near term, so it's not out of the woods yet. Management blamed pandemic restrictions in China and shifts in consumer behavior in Europe for lower sales in the quarter.
The company is managing what it can control by focusing on service, operations, and technology investments. Still, it has brought operating expenses down with sales to keep operating profit in the green.
Now what
Tupperware is planning to expand across more retail channels this year to grow its omnichannel business as part of a broader strategy to lift brand awareness. Management sees this as a critical long-term growth catalyst. The company is also focused on further pricing actions to mitigate inflationary cost pressures.
The near-term economic challenges have made Tupperware's turnaround plan more difficult to enact, but management is confident that it will succeed. The stock is down 84% over the last five years, but trades at a very low price-to-earnings ratio of 6.3 based on analyst estimates for 2022. It could be a bargain if management's efforts are successful.
