Natural Products Group, based in Irvine, California, filed for bankruptcy protection last week. The company owns the leading mlm company, Arbonne.
Court documents indicated that the company grew rapidly in 2005 and 2006 as Arbonne added a large number of direct marketing contractors, providing an unsustainable boost to revenue. It should be noted that the owners extracted $200 million in dividends in 2005. Shameful. If they had left that $200 million in the company, would they be in this position today? Probably not.
The company claims that net sales began to fall in 2007-2009 due to a loss of direct marketers and downturn in the economy. This is weird as direct sellers usually go great in a down economy. Why did Amway, Avon and Tupperware sales increase in the last few years?
To try and reduce their debt burden of $200 million, the company has begun a Debt Reduction Program. Will this stave off bankruptcy? Time will tell. One thing is certain – distributors will no longer be allowed to run around telling people that they’re a debt free company!
At this point it is not known what effect this event will have on the morale of distributors. Hopefully they will work with the company to re-establish Arbonne as a leader in the direct sales skin care industry.
