Add Category
The maker of Pyrex glassware and the Instant Pot multicooker has filed for Chapter 11 bankruptcy protection in the United States, as inflation and rising interest rates take their toll on a company that was already struggling before Americans began pulling back on spending.
Key points:
- Declining sales, inflation and rising rates have put the squeeze on kitchenware brands in the aftermath of COVID lockdowns
- US sales of multicookers such as the Instant Pot have more than halved since 2020
- Instant Brands, which also manufactures Pyrex, raised its prices and attempted to reduce costs, but it wasn't enough
According to a filing with the US Bankruptcy Court for the Southern District of Texas this week, Instant Brands, based outside of Chicago, has as much as $US1 billion ($1.48 billion) in liabilities.
Inflation has buffeted American consumers after a pandemic-fuelled binge on goods for the home, but spending has also moved elsewhere as people are again able to travel, or go to restaurants and shows.
And Instant Pots, which became must-have gadgets several years ago, have been disappearing from kitchens.
US sales of "electronic multicooker devices", most of which are Instant Pots, reached $US758 million ($1.12 billion) in 2020, at the start of the pandemic. Sales had plunged 50 per cent by last year, to $US344 million ($508 million).
Sales also declined by 20 per cent over the 12 months to April, according to the market research company NPD Group.
Just last week, S&P Global downgraded the company's rating due to lower consumer spending on discretionary categories, and warned that ratings could fall again if Instant Brands sought bankruptcy protection.
Instant Brands' situation echoes that faced by fellow kitchenware manufacturer Tupperware Brands, which is pursuing investors and considering selling real estate holdings to free up cash.
The company posted a loss of 24 US cents per share for the fourth quarter of 2022, rattling investors who were expecting a profit of 22 US cents per share.
In April, Tupperware received a non-compliance notice from the New York Stock Exchange for failing to file its annual results with the Securities and Exchange Commission, putting it at risk of being delisted.
High rates made situation 'unsustainable'
Ben Gadbois, chief executive and president of Instant Brands, said the company managed its way through the COVID-19 pandemic and global supply chain issues, but had run short of cash.
"Tightening of credit terms and higher interest rates impacted our liquidity levels and made our capital structure unsustainable," Mr Gadbois said in a prepared statement on Monday.
Loading...He said Instant Brands underwent several rounds of price hikes and operating cost reductions but it wasn't enough.
Instant Brands, whose brands also include Corelle, Snapware, CorningWare, Visions and Chicago Cutlery, said it has received a commitment for $US132.5 million ($195 million) in new debtor-in-possession financing from its existing lenders.
The company was acquired four years ago by the private-equity firm Cornell Capital and was merged with another kitchenware company, Corelle Brands.
Instant Brands' entities located outside the US and Canada are not included in the Chapter 11 filings.
In January, Instant Brands agreed to pay a fine and change its marketing practices to settle US Federal Trade Commission claims that it falsely advertised Pyrex glass measuring cups as "Made in USA", while importing some of them from China.
AP/Reuters