What Happens When a Great Brand Has an Outdated, Broken Business Model

Just because a brand is great, doesn't mean it's a good investment... The most compelling example today is Tupperware Brands (TUP), which is no stranger to my Empire Financial Daily readers. After the close on Friday, the company issued a regulatory filing that there's substantial doubt it can continue as a going concern – that […] Not rendering correctly? View this e-mail as a web page [here](. [Empire Financial Daily] What Happens When a Great Brand Has an Outdated, Broken Business Model By Herb Greenberg --------------------------------------------------------------- [Your town could be next...]( As one of the biggest global energy resets is starting to blanket the country from coast to coast – it will unleash a massive wealth-creating opportunity. On the flipside, dozens of well-known businesses, many of which support hundreds of thousands of retirees are likely to go bankrupt. The shift has already started in multiple cities, including San Diego, New Orleans, Washington, Denver, Newark, and San Jose. Your town could be next. To see how to be on the right side of the reset and start taking advantage of the biggest global shifts since the Internet, [click here](. --------------------------------------------------------------- Just because a brand is great, doesn't mean it's a good investment... The most compelling example today is Tupperware Brands (TUP), which is no stranger to my Empire Financial Daily readers. After the close on Friday, the company [issued a regulatory filing]( that there's substantial doubt it can continue as a going concern – that is, whether it can even manage to stay afloat. With $700 million in long-term debt and a market capitalization of just about $110 million, the company said it's not in compliance with New York Stock Exchange listing standards and that it's "doing everything in its power to mitigate the impacts of recent events" – including seeking additional funding. This is the same company as recently as a month ago was touting that it in February it had authorized a $75 million stock buyback. The reason, its CEO said, was its confidence "in our early outlook of the year." Never mind that it didn't have the cash flow or balance sheet to do one. (Tupperware is a classic example of why you should always run – not walk – from financially hobbled companies that announce buybacks as a sign of confidence. In reality, the mere announcement is usually a sign of desperation.) This is all just the latest in the ongoing saga of Tupperware, whose business model has been broken for years... Last May, [I gave a full rundown on how the stock of this iconic brand unwound]( in part because the days of Tupperware parties have passed it by... not just in the U.S., but across the globe. As recently as early 2020, just before the pandemic hit, Tupperware stock had sunk to levels as low as it is today, before skyrocketing almost overnight. Tupperware swiftly became a COVID winner as people started cooking more at home, causing them to seek out containers for leftovers, and its stock rose nearly 3,000%... Long story short, competition can topple even the greatest brands. In Tupperware's case, that means competition at retail from the likes of Newell Brands' (NWL) Rubbermaid, Clorox's (CLX) Glad, and Helen of Troy's (HELE) Oxo band, among many others that are cheaper and more readily available. But for a direct seller, it also means competition for salespeople. That's tough in the "gig economy" in the U.S. from the likes of Uber (UBER), DoorDash (DASH), and Lyft (LYFT), but also other direct sellers... including the Pampered Chef, Perfectly Posh, and Stella and Dot. The company is desperately trying to turn itself around... As part of doing so, it has started to turn to retail, currently via Target (TGT) and Amazon (AMZN). This is the second time in 20 years it has tried to sell through Target... in a sense, creating another layer of competition for itself. After one quarter, management says that Target amounts to around a mere 1% of sales. Adding to the challenge is the downside of having a brand that has become generic. By that, I mean if you go to Target's website and type in "Tupperware," it spits out products not limited to Tupperware, but also including its competitors, like Target's house brand, up & up. --------------------------------------------------------------- Recommended Link: [CNN calls this battery 'the next holy grail for EVs']( Tesla, Rivian, Hyundai, Volkswagen, Toyota, and GM are all scrambling to secure these "perfect batteries." But one automaker is way ahead of them... and it trades for just $12 a share. [Get the details here](... --------------------------------------------------------------- One of the trickiest parts of investing is determining if a product is a brand or a business, or worse, a fad... Tupperware clearly isn't a fad, but it has devolved into a brand that in all likelihood shouldn't be a company. The story is in the numbers... As of last year, Tupperware's sales had plunged by more than 50% from its 2014 highs. The company's gross margin is starting to shrink... and management says it's pulling out all stops to protect it, like plugging leaks in a dam. And it doesn't really matter, because the company is barely making money. At this point, the question is: what happens next? The reality is, just because Tupperware is a great brand doesn't mean things can't get worse. Wall Street is littered with the remains of great brands whose companies didn't survive... Among them, Blackberry, Kodak, Polaroid, Blockbuster, Toys "R" Us, Palm, America Online, and Xerox, to name a few... That's not to say all companies that are either given up for dead or deemed fads disappear. Great examples include Crocs (CROX), Apple (AAPL), Netflix (NFLX), Monster Beverage (MNST), Starbucks (SBUX), and Chipotle Mexican Grill (CMG). As for Tupperware, I'm sure the brand will survive, but doing so as a public company? That seems like a longshot. Regards, Herb Greenberg April 11, 2023 [Get a 60-day, 100% money-back trial to Empire Real Wealth by clicking here.]( --------------------------------------------------------------- If someone forwarded you this e-mail and you would like to be added to the Empire Financial Daily e-mail list to receive e-mails like this every weekday, simply [sign up here](. © 2023 Empire Financial Research. All rights reserved. Any reproduction, copying, or redistribution, in whole or in part, is prohibited without written permission from Empire Financial Research, 1125 N. Charles Street, Baltimore, Maryland 21201 [www.empirefinancialresearch.com.]( You received this e-mail because you are subscribed to Empire Financial Daily. [Unsubscribe from all future e-mails](