Founding of LuLaRo
LuLaRoe is a clothing company founded on May 1, 2013 by DeAnn and Mark Stidham. DeAnn is the president of the company and Mark is the CEO. As indicated on his Web site, his mission is to improve lives and create families through fashion. They “inspire confidence and are based on quality products made for you, the Customer.” So, before we get to the question of whether LuLaRoe is still in business, let’s go over the basics of the company.
LuLaRoe is a social selling company made up of social selling entrepreneurs. It is also made from income supported by the Stidham family and their local community. The name LuLaRoe came from their first three granddaughters named Lucy, Lola and Monroe.
In 2014, LuLaRoe expanded its apparel range to include dresses and skirts. They later added leggings, which made them their most famous product. The company had twenty-three employees and over 700 distributors. In fact, they did so well that they made nearly $10 million in sales. By the next year, they had over 2,000 distributors. An interview with CEO Mark Stidham in August 2016 indicated that LuLaRoe would have $1 billion in sales. By that point they had 26,000 distributors shipping exactly 350,000 units every single day. Then, by 2017, LuLaRoe had 80,000 distributors.
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First legal issues
Chances are you’re wondering if LuLaRoe is in business today because you’ve heard about their legal issues. That changed in 2017 when customers filed a class action lawsuit against LuLaRoe. They claimed that the point of sale software incorrectly calculated the sales tax rate for interstate sales. Also, in jurisdictions where there is no sales tax on clothing. Along with many complaints about poor product quality, this led the Better Business Bureau (BBB) to downgrade its rating to “F” in January 2017.
Later, in October of the same year, another lawsuit was filed for $1 billion in California, where she accused LuLaRoe of a pyramid scheme. The lawsuit alleged that LuLaRoe engaged in “wrongdoing, including unfair business practices, misleading advertising, and breach of contract.” LuLaRoe claims that all of this is baseless and apparently advised distributors to “borrow the money”. […] take out credit cards, and some have even been asked to sell their breast milk” to buy more supplies, the lawsuit alleges.
Other legal issues
Then in 2018, LuLaRoe faced controversy again. The National Down Syndrome Society (NDSS) has ended its relationship with LuLaRoe. This comes after one of LuLaRoe’s top distributors made fun of people with mental disorders during a live sale. NDSS then asked LuLaRoe to end its relationship with the distributor. This is what LuLaRoe refused to do because they accepted an apology from the distributor. This sparked outrage online.
At the end of the year, in between all the layoffs, salesman abandonment, and rising debts, top clothing supplier LuLaRoe sued them. Providence Industries demanded nearly $49 million, claiming LuLaRoe was insolvent. This meant that they could not pay their debts because the company had not paid their bills for seven months. The lawsuit also accused DeAnna and Mark Stidham of hiding their wealth in shell companies or offshore accounts due to their “luxury lifestyle” and of “obstructing, delaying and defrauding creditors”.
And even more legal issues
Eventually, in 2019, the Washington State Attorney General filed its own lawsuit against LuLaRow, along with Mark and DeAnn Stidham. It claimed that their multi-level marketing company was a Ponzi scheme, misleading earnings claims and encouraging them to focus on recruiting rather than selling. Providence Industries filed another lawsuit to seize the company’s assets. More complaints followed, this time over 300, resulting in LuLaRoe receiving another “F” rating from the BBB. So, is LuLaRoe still in business?
Well, in 2019, LuLaRoe, after closing distribution centers and laying off employees, filed a counterclaim against Providence Industries for $ 1 billion. In February 2021 alone, LuLaRoe agreed to pay almost $5 million for a lawsuit in Washington, although they still admit no wrongdoing. The agreement states that LuLaRoe is prohibited from acting like a financial pyramid and correctly publishing information about its income, as well as taking other similar measures to increase their transparency. However, they received another “F” from the BBB.
Present tense
Is LuLaRoe still in business today? Yes. They are still trying to make their business work in a more positive light. As of May 2022, LuLaRoe has managed to raise its rating to “C” from the BBB.
The story of the rise and fall of LuLaRoe is so intriguing to many that two documentaries have been made. “The Rise and Fall of LuLaRow” is on DiscoveryPlus. The other is LuLaRich, a mini-documentary series on Amazon Prime.
This story should be a lesson for aspiring entrepreneurs. Don’t skimp on your suppliers, distributors and customers. Bad management from the Stidham family so business with respect, loyalty and of course not breaking the law.
