LuLaRoe's CEO tearfully addresses inventory problems in leaked audio

YouTube/Car ThrottleLuLaRoe CEO Mark Stidham.

LuLaRoe CEO Mark Stidham tearfully addressed inventory problems and slammed “sensationalist journalists” on Tuesday in an internal video meeting in the wake of a Business Insider investigation into the multilevel marketing company, according to leaked audio from the meeting.

On the call, Stidham’s voice faltered with apparent emotion as he told the story of a LuLaRoe seller, whose name he did not know, who he said was helping families affected by the recent wildfires in California.

“As our community does good, I will promise you, we will continue to be attacked by those who don’t understand, who don’t get it,” he said. “There is a lot of excitement and curiosity around LuLaRoe. What is this thing? How did it become? And unfortunately, there are sensationalist journalists that are taking that name and leveraging it so they can get some clicks through on ridiculous, ridiculous things. I want you to know guys, they are going to do that and it doesn’t matter to us. It’s irrelevant. They are irrelevant.”

Stidham said he’d been getting a lot of emails from frustrated sellers over the past several weeks.

“I’ve read many, many of them and they are heartfelt; and they are people who are concerned about their business; people who are concerned about whether or not we are paying attention; whether we care for them,” he said. “And I want to reassure you that we absolutely do.”

Sellers, also called consultants, buy clothing from LuLaRoe at wholesale prices and then turn around and sell it at a markup to customers. Some have been complaining about inventory shortages and quality problems, as Business Insider’s investigation revealed.

“I empathise 100% with your frustrations that you don’t have the product to serve your customers,” Stidham said. “I don’t have the product to serve you, and therefore I don’t have the product to serve your customers. I understand that.”

LuLaRoe representatives did not immediately respond to a request for comment.

At one point during the call, Stidham offered an explanation for the company’s loss of top sellers. About one-third of LuLaRoe’s top sellers have exited the company since July, according to data reviewed by Business Insider.

“Have you noticed that a whole bunch of top retailers have left lately? You want to know why? Because I refused to give them preferential treatment,” he said. “They came to us and said, ‘We’re your biggest sellers – you need to give us first choice. You need to let us come into the warehouse and pick our own orders. You need to let us get the things we need so that we can continue to grow our business.’ And I challenged them on that thinking.”

Toward the end of the call, Stidham said he recently travelled to China to secure more sources for production.

“I had a vision that we would find these old Chinese guys smoking cigarettes in a backroom somewhere with a factory,” he said. “The people that we met are young entrepreneurs that are excited about the opportunity that is coming to them because of what you sell.”

Shortly after that, he paused and it sounded as if he had started to cry.

“We are making a difference in the world – don’t lose sight of that,” he said, his voice faltering. “We have over 2 million garments coming in the next three weeks and the pipeline is filling and we will continue to have things coming. We love you. We appreciate you.”

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