RIVERSIDE, Calif. — A Riverside Superior Court judge ruled Friday against an emergency request from a LuLaRoe vendor to have a court-appointed fiduciary installed at the direct sales business.
The judge’s decision does not stop vendor Providence Industries LLC from making the same request on a nonemergency basis, which it said it intends to do.
“Providence Industries is confident that once the court fully considers the evidence that it will prevail and will continue to vigorously seek repayment of its debt,” the company said in a statement released Friday.
LuLaRoe, in a statement released after WWD sought comment on the judge’s decision and lawsuit allegations, called the case a “very complex and heavily disputed matter.”
It went on to say, “We will continue to serve retailers [the company’s sellers] with quality products, a continued mission to help improve lives and strengthen families.”
The hearing on the matter stems from a lawsuit Providence lodged against the Corona, Calif-based company, which has been no stranger to legal complaints from vendors, its sales force and customers of its products. Quality complaints against its leggings — what helped propel the business — has been one black eye among many others for LuLaRoe.
The company held an F rating in September and currently has no rating from the Better Business Bureau. The latter assignation indicates the company’s file is either under review or there is not enough information for a rating.
The bureau shows 450 closed complaints against LuLaRoe in the past three years that range from quality issues to unpaid debts.
Providence’s lawsuit, filed late last month, is against not only LuLaRoe but several LLCs believed to be owned by cofounders Mark and DeAnne Stidham.
Providence’s lawsuit paints an ugly picture of the internal workings of the company, citing reports hinting at insolvency and the raft of lawsuits against the firm. It also alleges some $120 million paid out by the company to its sellers during the course of a refund program erected between April and September 2017. The lawsuit went on to say that around that same period, in August 2017, LuLaRoe’s monthly revenue was slashed from $200 million to $100 million.
The lawsuit alleged Mark, who serves as the company’s chief executive officer, in a September conversation with Providence about monies owed to the vendor said, “Look guys, I am not going to pay you guys a f—king dime unless a judge orders me to pay it, and Deanne and I will take our two to three hundred million dollars to the Bahamas and f–k everything.”
The alleged comment served as the impetus for Providence’s emergency request for a court-appointed fiduciary to manage the business.
LuLaRoe first began turning heads for its rapid growth, employing a direct selling method that uses sellers — the company calls retailers — to purchase product that is then sold to the end user.
LuLaRoe reported to WWD earlier this year it saw $3 million in wholesale sales in 2013. The business was launched in May of that year. The following year it recorded $9.6 million in sales, $74 million in 2015, $1.3 billion in 2016 and $1.6 billion in 2017.
The company said 2018 would be the first year the business contracted with a projection of $800 million to $1 billion, which the Stidhams blamed on back-end struggles to keep pace with the company’s growth.