Facing a defining moment
Can Tupperware survive declining sales, 2 executive departures?
Over the last two years, Tupperware has endured declining sales, falling stock prices and the departures of two top executives.
Following Tricia Stitzel stepping down as chairman and CEO, experts believe it’s time for the company to ask what kind of business it wants to be after decades of familiar faces in leadership roles.
“They have to have a decision about how much change they’re willing to make in their business model,” said Ron Piccolo, chair of the management department at the University of Central Florida. “They have to either be really aggressive for growth or they have to look at ways to restructure or even liquidate part of their business.”
The last two people at the helm, Stitzel and Rick Goings, had been with Tupperware since the 1990s. The global marketer of kitchen, beauty and personal care products employs about 300 people at its headquarters in Osceola County.
“This is a meaningful changing of the guard,” said Doug Lane, an analyst who follows Tupperware. “This is the first time in a long time that the company’s going to get, in my opinion, a thorough looking at and soul searching.”
Tupperware’s stock fell more than 75% between the start of 2019 and Nov. 26. The company also announced on Nov. 8 it was suspending its quarterly common dividend.
The business has not seen sales increase in a quarter over the previous year since 2017, earnings reports show. In the third quarter of 2019, sales were at $418.1 million, down 14% versus last year.
Tupperware declined an interview request for this story, but a spokesperson sent written responses to questions sent by email.
“We are evaluating our cost structure to increase financial flexibility to invest in new sales platforms and prioritizing current capital spending ($65 million in capital expenditures) on initiatives to drive sales,” the company said.
Lane believes Tupperware did not make investments to keep up with modern technology.
Tupperware recently relaunched its website in the United States and Canada and launched a tool in August that allows its sales force in those countries to promote marketing content across social media platforms, the company said. It plans to launch that tool in 12 European countries next year.
Stitzel brought up the website relaunch and new social media tool in the third quarter earnings call.
“Those statements should have been made three or four years ago,” Lane said. “It’s evidence that they’re late to the game.”
Tupperware has to decide how much the company is willing to change, Piccolo said. That may mean less of an emphasis on the company’s traditional way of engaging customers, its individual sales force of over 3 million, which has been experiential and time intensive.
“The Board understands the need to find a leader who understands our channel while also recognizing the different strategies we can employ to expand customer access, drive engagement through sales force relationships and e-commerce digital connections, and deliver lifestyle product innovations that provide solutions for customers,” the company said.
With the lower stock prices, Piccolo believes Tupperware is primed for someone to buy the company. Lane added all options are on the table given the stock price.
“The risk is that they could move the headquarters, or they could reduce their footprint in Orlando,” Piccolo said.
In addition to employing hundreds of people in Central Florida, Tupperware has also had a hand in development and community efforts, with executives serving on local boards.
“Tupperware Brands continues to provide philanthropic and social impact support in the Central Florida community,” the company said in its written response. “In the last five years, we’ve invested $1.25 million in youth-serving organization such as the Boys & Girls Clubs, Pace Center for Girls and Girls on the Run.”
Near Tupperware’s headquarters, land transactions have been ongoing since 2002 as part of planned development on excess land, the business said.
“The company’s strategy is to complete the sale of all the development property in the near future, depending upon market conditions,” Tupperware said.
Stitzel, Tupperware’s first female CEO, replaced Goings in 2018 after he had been chairman and CEO since 1997. Goings had been with the business since 1992.
It’s not unusual for the immediate successor of a long-term CEO to have a short tenure, Piccolo said.
“Typically, there’s change that needs to happen after a long-standing CEO and the person who immediately follows is in the toughest position of all,” he said.
Stitzel had been with the company since 1997. She previously served as president and chief operating officer and had also run manufacturing and human resources divisions company.
“She was not an agent change,” Lane said.
Her separation agreement included $1,983,279 in severance along with other benefits, according to documents filed with the Securities and Exchange Commission.
Christopher O’Leary was named interim CEO after serving as independent director of the company’s board since January. His annual base salary is $1 million and he was also eligible for a $1 million stock award and participation in the company’s incentive program, documents show.
Susan Cameron, lead director of the board, was named non-executive chairman.
O’Leary previously worked as executive vice president and chief operating officer, international, for General Mills. Along with executive vice president and chief financial officer Sandra Harris, O’Leary is set to present at the Morgan Stanley Global Consumer and Retail Conference on Tuesday.
Whoever ends up taking the job will join the business at a crucial moment.
“This is a very important time for this company in charting out the direction of where it wants to go and what it wants to be,” Lane said. at the of