LuLaRoe founder says the company is 'starting over' amid seller exodus and looming $63 million legal battle

DeAnne StidhamYouTube/LuLaRoe

  • LuLaRoe's top executives say the multilevel-marketing company is "starting over" and "being reinvented."
  • "I love that everybody is saying 'LuLaRoe 2.0,'" LuLaRoe founder DeAnne Stidham said in a video the company shared online. "I think that's really what it is, because you know, we're starting over."
  • LuLaRoe's reinvention comes as it faces an exodus of sellers and a $63 million lawsuit from its chief supplier, Providence Industries.
  • The suit originally sought $49 million in damages. In an amended complaint filed in California state court on Monday, Providence raised the damages sought to $63 million.
  • LuLaRoe has denied the claims in the lawsuit.

LuLaRoe's top executives say the company is "starting over" and "being reinvented" as it faces an exodus of sellers and a $63 million lawsuit from its chief supplier.

"I love that everybody is saying 'LuLaRoe 2.0,'" LuLaRoe founder and president DeAnne Stidham said in a video that LuLaRoe produced and shared online on Tuesday. "I think that's really what it is, because you know, we're starting over. And we like to do that because we want it fresh, and we want new items for everybody to get excited about."

Stidham's husband and LuLaRoe's CEO, Mark Stidham, also chimed in on "LuLaRoe 2.0," saying the company is being "reinvented" after learning about "what our retailers need from us and really narrowing in on the tools that we need to develop for them and the products that we need to develop."

"It's fresh and it's kind of being reinvented, but it's being reinvented on the shoulders of those things that we have learned in the past," he said.

Read more: LuLaRoe faces a probe by the Washington State Attorney General's Office, sources say

In a separate video posted to DeAnne Stidham's Instagram page on Sunday, the LuLaRoe founder alluded to the company's problems with defective clothing.

"There was a glitch in the fabrics and the prints and everything and it just took us a little bit to say, 'Hey, we gotta get busy and make it better … a better situation, a better life, a better experience for all of you," she said.

She encouraged people to continue selling LuLaRoe clothing, saying those who stick with the company will "reap the benefits 10 times or more."

Read more: LuLaRoe is facing mounting debt, layoffs, and an exodus of top sellers, and sources say the $2.3 billion legging empire could be imploding

She also appeared to allude to refunds owed to former retailers, saying, "amazing things are going to happen with refunds."

Hundreds of LuLaRoe sellers have said they've been waiting months, some more than a year, for refund checks after exiting the business.

In response to this story, a LuLaRoe spokesman said, "LuLaRoe is always working to find new ways to improve and implement key learnings into the business."

The Stidhams' remarks on the company's reinvention come as LuLaRoe grapples with a loss of sellers, or consultants. Consultants buy clothing from LuLaRoe at wholesale prices and sell it to customers at a markup.

Read more: LuLaRoe's CEO tearfully addresses inventory problems in leaked audio

LuLaRoe had fewer than 35,000 consultants in September, down from the more than 77,000 it had in February 2017, according to estimates provided in a sworn statement by Patrick Winget, LuLaRoe's former head designer.

At the same time, LuLaRoe is facing a lawsuit from its chief supplier, Providence Industries, claiming that the clothing company has failed to pay its bills for months.

Read more: LuLaRoe supplier demands immediate seizure of $34 million worth of assets after the CEO's alleged threats to 'jump ship' with its riches

The suit originally sought $49 million in damages. In an amended complaint filed in California state court on Monday, Providence raised the damages sought to $63 million.

LuLaRoe has denied the claims in the lawsuit.

"We believe the claims in this case are completely without merit and will fight vigorously against them," a LuLaRoe spokesman said. "Given this is pending litigation, we cannot comment on the specifics."

The next hearing for the case is scheduled for January 28.

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