Tupperware Brands Corporation ( NYSE: TUP ) fell in early trading on Wednesday after the company reported a Q4 loss on a preliminary basis.
Sales in South America increased 24% during the quarter led by double digit growth in Brazil and ongoing strong performance elsewhere in the region, particularly in Argentina. However, sales fell 20% in North America as the effect of pricing and compensation plan actions resulted in lower sales than expected. Asia Pacific sales were down 22% with China still impacted by COVID.
Gross margin was up 100 basis points to 62.6% to mark the first year over year improvement for TUP's gross margin in six quarters. Tupperware Brands ( TUP ) said gross margin is beginning to benefit from our recent pricing actions and better category management.
On the balance sheet, TUP ended the year with $705.4M in total debt, slightly below the $709.4M at the end of 2021. Cash generation was noted to have improved in Q4 from trends earlier in the year as a result of stringent inventory management and cost controls, coupled with the pricing initiatives that were taken throughout the year.
CFO update: "We raised prices to protect gross margins, worked with our banks to provide more financial flexibility, accelerated our re-engineering efforts as part of our ongoing commitment to right size the business, and developed innovative programs to significantly reduce inventories in the fourth quarter... While we are pleased with these positive initiatives, we expect 2023 to be a transition year, as we work to stabilize the business and solidify our financial foundation."
The company said it is in the process of finalizing its financial statements for Q4 and full year after identifying prior misstatements.
Shares of Tupperware Brands ( TUP ) fell 3.41% in premarket action to $3.96 following the earnings report.
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Tupperware Brands falls after posting preliminary results