- DA Davidson analyst Linda Bolton Weiser reiterated a Neutral rating on the shares of Tupperware Brands Corporation TUP and lowered the price target from $4.50 to $3.
- On Mar. 1, TUP reported 4Q22 sales decline of 20% Y/Y to $314 million, above the consensus.
- Sales are still being hurt by volume declines that exceed pricing benefits, but gross margin was up Y/Y for the first time in quite a while and inventory did come down sequentially, said the analyst.
- TUP's sales performance in Target Corporation TGT stores exceeded expectations, and the Tupperware brand immediately captured 10% market share, but sales to TGT represented only 1% of total company sales, noted the analyst.
- On Feb. 22, 2023, TUP entered into a Third Amendment to its November 2021 credit agreement, which provided for additional relief with respect to the maximum permitted leverage ratio and minimum permitted interest coverage ratio, said the analyst.
- Management anticipates the company will remain compliant with financial covenants for the year following the issuance of the 2022 financial statements.
- The analyst remarked that Tupperware identified misstatements in its financial close process in prior periods, the most significant of which relate to historical accounting for income taxes.
- TUP also concluded it did not design and maintain effective internal controls related to the accounting for the income tax provision and related income tax assets and liabilities.
- The company said it would start marketing cast-iron Dutch ovens in 2023, as well as reusable silicon food storage bags.
- Mexico and Brazil now represent >25% of sales and an even higher percentage of operating cash flow - while Brazil is currently growing, Mexico is still experiencing lower sales force productivity, with Y/Y growth not expected until 2H23, said the analyst.
- Price Action: TUP shares are trading lower by 12.9% at $2.57 on the last check Monday.
- Photo Via Company
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