Tupperware stock crashed 45% this morning: this is why

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Tupperware Brands Corporation (NYSE: TUP) crashed about 45% this morning after the kitchen and household products company raised doubt about its “ability to continue as a going concern”.

Tupperware could fail to comply with covenants in its credit agreements

The multinational reported disappointing results for its fiscal third quarter on Wednesday as well. But investors were more concerned about that warning. The press release reads:

It’s probably that Tupperware won’t be able to maintain compliance with covenant in its Credit Agreement, which raises substantial doubt about the Company’s ability to continue as a going concern.

According to Tupperware, it’s negotiating with lenders but is not sure if it’ll succeed in revising the Credit Agreement.

Versus its year-to-date high, Tupperware stock is now down nearly 80%.

Tupperware shares also tanked on disappointing earnings report

  • Net income printed at $16.8 million that translates to 38 cents a share
  • A year-ago, Tupperware had $86.1 million loss or $1.63 per share
  • Adjusted EPS was 14 cents as per the earnings press release
  • Revenue tanked 20% on a year-over-year basis to $302.8 million
  • Consensus was 42 cents a share of EPS on $316.1 million revenue

Consolidated net leverage ratio, the Orlando-headquartered company said was 4.17 this quarter, within the debt covenant limit of 4.5. CFO Mariela Matute said:

While we continue to make investments that are essential for our turnaround, we remain focused on meeting our debt covenants, while making decisions that we believe will improve long-term profitability. Given revenue trends YTD, we expect to take additional restructuring actions in Q4 and implementing stringent inventory reduction programmes.

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