Longaberger To Close Mall Outlet Stores, Focus On Direct Sales
The Longaberger Co. has hit bottom, but its sales force will benefit from changes made by parent company CVSL, the company stated in a Tuesday conference call.
CVSL, which includes Longaberger as one of its eight direct-selling companies, reported first-quarter revenues decreased by $7.4 million, or 28 percent, compared to 2014.
Longaberger, which has seen its employment fall to 230 total and 68 at its basket-shaped corporate headquarters, has been the main reason for the CVSL revenue decline, according to the CVSL report.
I think we have hit the bottom at the revenue line, CVSL CEO and President John Rochon said of Longaberger. We're fixing the company. We have a strategy to get the sales back to the sales force.
CVSL does not report revenues of its individual companies, but did report home decor revenue decreased from $15 million in the first quarter of 2014, to $9.3 million in the first quarter of this year.
Rochon said Longaberger retail stores in shopping malls will be closed, but the Longaberger Homestead will not be affected.
The whole business of discounting a premium brand makes no sense, Rochon said. The whole idea of competing with the sales force makes no sense. It's unfair. It's just not a smart thing to do, and we're not going to do it.
You don't manage those (consultants). The compensation plan manages those people. What happened at Longaberger is they kept disengaging the compensation plan.
Sales at the discount stores produced about $8 million per year, Rochon said.
Tami Longaberger, who recently resigned as company CEO, announced at the 2011 Longaberger Bee that the company would open 18 more factory stores in addition to five stores already open.
Initially called factory stores, then home showrooms, Longaberger sold recently retired Longaberger items and current products were displayed and ordered.
Longaberger opened factory stores at Easton Town Center and Polaris Towne Center in 2010.
We eliminated a major source of frustration for the sales field, said Russell Mack, a CVSL director. We're not renewing the leases on those stores.
The first-quarter report states that CVSL income declined primarily due to the short-term impact of turnaround actions taken at (Longaberger).
The Longaberger product line has been narrowed, back orders reduced and inventory returned to a sensible level, CVSL officials said.
Longaberger was a deeply troubled company in steep decline for 12 years, Mack said. We spent the first two years dealing with fundamental problems we inherited.
Mack said Longaberger has erased all its bank debt, but Licking County Auditor Mike Smith said last month Longaberger was $250,000 behind on its tax increment financing payments to the city of Newark and Licking Valley School District.