International Law

S&P Rating For Tupperware

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From Rachel writing at OP Tree, we learn that S&P has raised their rating on Tupperware debt from BB to BB+

"While S&P feels that Tupperware has made significant improvement, they still feel that it will be necessary to keep a close eye on the company.

Tupperware has continued to steadily improve, however the direct sales industry continues to be highly competitive and at times volatile. The outlook for the company is good and will remain stable for the foreseeable future.

'The ratings on Tupperware continue to reflect the risks of direct-sales distribution and the company's participation in the highly competitive cosmetics industry,' said Standard & Poor's credit analyst Christopher Johnson.

But, he said, 'the company's moderate financial policies, improving credit protection measures, its product and geographic diversity, along with its well-known brand name and premium product position in the mature molded-plastic storage category, offset these factors."

Hmm, I would guess that that Tupperware is at risk because of their move from a franchise model to a network marketing model.

Plastic is not longer sexy enough to sell exclusive through home parties - and once you start selling through other distribution channels it becomes very hard to maintain the markup.

I doubt that there is a such a business category as "mature molded-plastic storage category".

The real increase in Tupperware USA has been the gross sales in Beauty Control, and I expect this to continue.

Full post as published by Misleading Advertising Law on August 28, 2008 (boomark / email).