Pomerantz Overcomes Motion to Dismiss Suit Against Tupperware

Pomerantz recently overcame defendants’ motion to dismiss its securities class action suit against the well-known food storage company Tupperware. The case concerns alleged misstatements about the company’s actions to combat rising costs and dwindling profit margins.

After years of declining sales, in March of 2020 Tupperware named Miguel Fernandez as the new CEO, part of a multi-year “Turnaround Plan” undertaken by the company. The plan also included initiatives to sell products in stores and online, as opposed to its traditional direct selling strategy, notably exemplified by “Tupperware Parties.” The Turnaround Plan coincided with a spike in sales due to the Covid-19 pandemic, during which more people were cooking and storing food at home. In response to the sales increase, Tupperware intentionally increased its inventory.

However, the spike in sales was short-lived and Tupperware was left with an excess of inventory. At the same time, inflation was driving up the cost of raw materials. When asked about the effects this would have on the company’s business, Tupperware repeatedly assuaged fears and reassured analysts, claiming that they were shifting to more profitable sales and raising prices to keep up with inflation. In truth, Tupperware was actively discounting its merchandise in order to sell through its inventory, eviscerating its profit margins. The truth was revealed in May 2022 when the company admitted it had delayed increasing prices, and that its profitability was significantly impacted. On this news, Tupperware’s share price fell 32%.

Fernandez, as well as Tupperware CFO Cassandra Harris, are also named as defendants in the suit.