This year has seen numerous store closures and bankruptcy declarations. Tervis Tumbler, a well-known Florida company recognized for its double-walled tumblers, is the latest to declare bankruptcy.
Operating from North Venice, the company seeks to restructure under Chapter 11 to support potential growth. It has also notified the state of an impending significant layoff, though it intends to retain a fundamental team of employees across all departments as it undergoes bankruptcy proceedings.
Key Takeaways
- Chapter 11 Filing for Restructuring: Tervis Tumbler Co. filed for Chapter 11 bankruptcy to restructure its finances, citing changes in consumer behavior, increased competition, and ongoing legal disputes as key contributors to its financial struggles.
- Significant Debt and Revenue Decline: Tervis faces approximately $32.75 million in debt and has seen a sharp decline in revenue, dropping from $90 million in 2022 to around $33 million in 2024, mainly due to competition from stainless-steel drinkware brands.
- Cost-Cutting Measures and Layoffs: To reduce expenses, Tervis plans to cut employee salaries and lay off a significant portion of its workforce while maintaining a core team for ongoing operations during the bankruptcy proceedings.
- Focus on Restructuring and New Product Lines: As part of its recovery strategy, Tervis aims to pivot towards home-use products with a new sub-brand, TervisHome, while continuing to restructure its operations for long-term stability.
Tervis Tumbler Files for Chapter 11 Bankruptcy Amid Financial Challenges and Legal Dispute
Tervis, a long-standing Venice-based manufacturer of double-walled drinkware, has filed for Chapter 11 bankruptcy. The company has been in business since 1946 and owes about $32.75 million to creditors. Key issues contributing to the bankruptcy include changing consumer shopping patterns, increasing competition, and a lengthy legal dispute with a vendor.
Hosana Fieber and Tervis Chairman Rogan Donelly describe the Chapter 11 filing as a tough but essential move to stabilize the finances of their family-owned company, now in its third generation. Donelly mentioned that they do not plan to seek external investment for post-bankruptcy operations, intending to keep the business within the family.
Despite the challenges, Donelly emphasizes the brand’s resilience, noting Tervis’s 78-year history and adaptability through various economic climates. He views the bankruptcy as a strategic decision to maintain the company’s heritage and improve its future stability and growth prospects.
Fieber expressed confidence in the restructuring process, aiming for a swift exit from bankruptcy within three to six months. She highlighted that this period would provide a crucial pause, allowing the company to emerge more robust. In line with focusing on core strengths, Tervis plans to focus more on products designed for home use rather than mobile scenarios. This strategic pivot includes launching a new sub-brand, TervisHome, and introducing a new line of products next year.
Tervis, once a major employer in the Sarasota-Bradenton area, expanded rapidly, particularly after launching its retail presence in stores like Bealls in 2009. During the pandemic, the company saw a rise in online sales, with e-commerce growing from 15% in 2019 to 21% in 2021. Tervis invested in a new distribution center at its Venice facility to keep up with demand. However, the post-pandemic shift in consumer spending, which favored experiences and services over products, led to a sharp decline in revenue, dropping from $90 million in 2022 to approximately $33 million by mid-2024.
Closing major retail partners like Bed Bath & Beyond in 2023 also impacted Tervis’ revenue. In response, the company sold its distribution center property for $15.35 million in August 2023 and now leases back a portion of the space. Tervis currently rents 60,000 square feet for its headquarters, paying around $70,000 monthly.
Tervis also operates several retail stores in Osprey, Ellenton, Panama City Beach, Key West, Frankenmuth, St. Augustine, Michigan; Pigeon Forge, Tennessee; and Myrtle Beach, South Carolina. According to court filings, the rent for these stores currently costs $75,000 monthly, but it is expected to drop to $50,000 by early November.
During the bankruptcy process, Tervis has sought court approval to maintain employee salaries. As of the bankruptcy announcement, Tervis had 129 employees, with anticipated job reductions to lower expenses. The company’s biweekly payroll, currently at $305,000, is expected to decrease to $205,000 by early November.
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CEO Hosana Fieber, who assumed her role in October 2023, has an annual salary of $425,000, down from $499,266. Former CEO and current board member Norbert R. Donelly earns $350,000 annually, while his father, chairman emeritus Norbert P. Donelly, receives $250,000 annually. Both have postponed their pay amid the company’s reorganization efforts.
Tervis is facing about $27.8 million in unsecured debts. Its largest creditor is TMF Plastics, which is owed more than $10.1 million. United Community Bank holds a lien on the company’s accounts receivable and inventory worth $4.95 million. Tervis’s total assets are valued at approximately $15.7 million. A crucial meeting with creditors occurred in early October during the restructuring process.
Company revenue has fallen significantly, from $90 million in 2022 to $33 million in 2024, impacted by changes in consumer preferences and increased competition in the drinkware industry. Challenges have intensified with competitors’ entry of stainless-steel products. Tervis has been experiencing difficulties for several years due to evolving industry dynamics and an ongoing legal dispute with a vendor.
Between 2011 and 2015, Tervis experienced rapid growth, but challenges arose with the advent of stainless steel drinkware competitors like Yeti, Hydroflask, and Swell beginning in 2014. These brands quickly captured significant market share, placing Tervis in a challenging position as demand shifted away from its traditional plastic tumblers toward stainless steel options.
To adapt, Tervis entered the stainless steel market in 2017, moving away from its “Made in the USA” promise to source tumblers from China. This transition initiated a challenging phase for Tervis, struggling to match the established brands in terms of quality and price. Issues like chipping and peeling plagued their stainless steel products, problems that were not effectively addressed until 2023.
Complicating matters further, Tervis ended its partnership with SIC Products LLC, the supplier of its stainless steel tumblers, in 2017 due to disagreements over pricing. The following year, SIC Products filed a lawsuit against Tervis, alleging breach of contract and accusing the company of producing imitation products. This legal battle, which had been ongoing for over six years, was still unresolved as of September 2024. It was scheduled for trial on September 23. Still, the proceedings were halted due to Tervis’s bankruptcy filing, which officials described as “burdensome” in their statements to the Business Observer and during interviews.
Despite these issues, the leadership remains hopeful about the company’s potential to restructure and recover.
Upcoming Layoffs at Tervis Impacting Multiple Positions in Tampa Bay and Sarasota
The company reports employing 131 individuals in the Tampa Bay and Sarasota regions. They plan to lay off 55 employees on November 11, four on December 14, and another on December 20.
The layoffs will affect various job titles, such as Assistant Store Manager, Accounts Coordinator, Key Holder, and Store Manager.
About Tervis Tumbler Co.
Tervis Tumbler, a family-owned company based in Florida, has produced durable and insulated drinkware since 1946. Known for their original double-walled tumblers, which help maintain the temperature of hot and cold drinks, Tervis offers a wide range of products, including tumblers, mugs, water bottles, and drinkware for kids. Their products are available in thousands of designs, allowing customers to express their style.
The company’s headquarters reflect the relaxed Florida lifestyle, providing a casual work environment that supports individual growth and overall success. Tervis also operates retail stores in various well-known cities across the U.S. and offers employees competitive pay, benefits, and a generous discount on its products.
Conclusion
Tervis Tumbler Co.’s bankruptcy filing under Chapter 11 marks a significant turning point for the company as it seeks to stabilize and adapt to a changing market. Focusing on restructuring, reducing overhead, and pivoting towards new product lines, Tervis aims to emerge more robust and focused from this period.
While the company faces challenges from increased competition, shifting consumer preferences, and ongoing legal disputes, its leadership remains committed to retaining the brand’s legacy and positioning it for future growth. The coming months will be critical in determining the company’s long-term viability.
