The Social Age

by Andrea Tortora

Click here to order the January 2016 issue in which this article appeared or click here to download it to your mobile device.

The Social Age is here. If you’re not taking full advantage of the tools and technologies that social platforms have to offer, you and your company are likely to be left behind as the competition leaps ahead. Now well into its infancy, the Social Age is and will be making a tremendous impact on the sales industry, especially within the world of direct selling. The changes already cannot be ignored.

Technology drives everything—recruitment, retention and revenue—for most companies. Those businesses that realize what they can achieve when all of their internal, back office, social media, field tools and software systems work together are equipped to innovate and leverage essential data that will let them thrive in the future.

Facebook, Twitter, LinkedIn, YouTube, Pinterest and Instagram are potent tools that companies and consultants are learning to use as they build connections with customers and grow sales. Other apps such as Periscope and Google Hangout are gaining traction, too. Yet many executives and companies are slow to embrace these advances. A study from and Domo finds that 68 percent of Fortune 500 CEOs have no social media presence. Among the 30 percent who do, they only use one social channel. Here LinkedIn was the chosen platform.

In contrast to that study, it does appear that C-level executives within direct selling are more plugged in to the benefits of these engagement tools. A recent study conducted among members by the U.S. Direct Selling Association (DSA), titled The 2015 Managing Your Company’s Web Presence and Technology Systems Survey, indicates that nearly six in 10 companies surveyed report that one or more of their chief-level executives have company-associated social media accounts that they actively engage in
(57 percent).

Additionally, over half of those also indicate that the chief executives create the content for those accounts. At Scentsy, the Idaho-based wickless candle company, it’s common for an executive to personally respond to field achievements or post in conversations on Facebook, the social media platform most used by Scentsy Consultants.

Rick Stambaugh, Chief Information Officer at Utah-based company USANA, refers to the focus of today as “Digital Humanism.” He says, “The consumer-driven Internet of things has many components, but the most prominent one is social.”

As direct sellers work toward more fully embracing the Social Age and everything that comes with it, a few things are clear…

Click here to read the full article in Direct Selling News.


CVSL Revenue Climbs 54% as Quarterly Loss Narrows

Direct selling group CVSL Inc. (CVSL—NYSE MKT) on Monday reported a loss of $4.9 million or 23 cents per share in the third quarter, up from a $6.7 million loss a year ago.

Revenue rose 54 percent to $37 million, boosted by the acquisition of Kleeneze in March 2015 and higher sales in the gourmet food segment. Year to date, revenue is up 22 percent.

The company acquired U.K.-based Betterware in the third quarter, but management said its focus was on strengthening CVSL’s existing portfolio of companies through cost-control and efficiency measures.

“Our core business is showing good improvement as our turnaround efforts are having a positive effect,” Vice Chairman John Rochon Jr. said in the company’s release. “We believe that we are now in the position of using CVSL’s earnings primarily to fund growth in the future, rather than to fund losses as was the case earlier in our development.”

Gross profit was up 69 percent at $22.1 million, with a margin of 60 percent compared to 54 percent in the prior year. The company closed out the quarter with $5.4 million in cash, versus $2.6 million a year ago.

CVSL Pursues Dismissal of Lawsuit by Former Longaberger Chief

Photo: Longaberger’s Newark, Ohio, headquarters building, modeled on the Longaberger Medium Market Basket.

A dispute between ousted Longaberger Co. CEO Tami Longaberger and her former employer has made its way to the Common Pleas Court of Franklin County, Ohio, where the company has filed a motion to dismiss Longaberger’s lawsuit for $1 million in alleged unpaid loans.

The lawsuit, filed on Aug. 12, also names as defendants CVSL Inc., controlling partner of Longaberger Co., and Agel Enterprises, a subsidiary of CVSL. Longaberger, daughter of company Founder Dave Longaberger, claims she made three separate loans to CVSL in 2014 as the company faced a “severe cash crisis.” According to the former executive, the notes have come due without any payments of principal or interest.

In a motion filed Oct. 12, CVSL alleges that all of Longaberger’s claims are subject to binding arbitration, per a provision in the employment agreement between Longaberger and CVSL. The two parties signed the agreement in March 2013, following CVSL’s acquisition of Longaberger Co. Claiming the entire dispute falls under the scope of arbitration, CVSL has urged the court to dismiss the case with prejudice.

Longaberger filed her own arbitration demand at the time she filed the lawsuit. In its motion, CVSL states that it has responded to Longaberger’s demand with multiple counterclaims of its own, related to Longaberger’s actions while employed by the company, “including breach of fiduciary duty, fraud, negligence, conversion, misappropriation of company funds, civil theft, breach of contract, and misappropriation of trade secrets.”

According to CVSL, the alleged misconduct came to light following Longaberger’s decision to resign from her role at the basket-maker and her seat on CVSL’s board of directors. In resignation letters dated April 28 and May 29, Longaberger claimed CVSL had cut her base pay by $600,000, placed executives over her at the company, and caused Longaberger to fail to pay sales taxes in several states, prompting authorities to assess her personally.

CVSL terminated Longaberger before her employment period ended, a decision it defended in a June 1 letter to Longaberger. The company states that an internal investigation revealed “substantial misconduct that has damaged the Longaberger Company and CVSL.” The letter claims that Longaberger was unwilling to work closely with the company’s sales field, engaged in an inappropriate personal relationship with a subordinate executive, and frequently absented herself from Longaberger’s corporate office.

CVSL Builds UK Business with Acquisition of Betterware

Photo: Betterware’s Birmingham headquarters.

CVSL Inc. is strengthening its position in the U.K. direct selling market with the acquisition of Betterware Ltd., the Dallas-based company said Thursday. The deal follows CVSL’s February acquisition of Kleeneze, another prominent U.K.-based brand.

Like Kleeneze, Betterware has operated in the U.K. since the 1920s. Both brands market a range of houseware, home-cleaning, health and beauty, clothing and outdoor products. Birmingham-based Betterware has signed on about 5,000 distributors across the U.K. and Ireland. In its last reported 12-month period, the company posted net revenue of approximately $36 million.

“With both of these established consumer growth brands in the CVSL portfolio, we expect to have a total sales network of about 13,000 people in the U.K. market, making us a major income opportunity creator in the U.K. and Ireland,” CVSL’s Vice Chairman and CFO, John Rochon Jr., said in a statement. “Having Betterware and Kleeneze together inside CVSL should give us an excellent platform for expansion into other European markets.”

With its recent additions in the U.K., CVSL has built a portfolio of 10 direct selling companies. Previous acquisitions include The Longaberger Company, Your Inspiration at Home, Agel Enterprises and Uppercase Living. Under the CVSL umbrella, each company retains its own separate brand identity, salesforce and compensation plan while receiving combined operational support.

Managing Director Rob Way calls the opportunity to join CVSL a great one for Betterware. “This will open an exciting new chapter in our company’s long and storied history. We are eager to make the most of this alliance and believe the efficiencies to be gained will be very good for our distributors and their customers,” said Way.

CVSL Rings Closing Bell at the New York Stock Exchange

Photo: Your Inspiration at Home Founder and CEO Colleen Walters (center) leads the bell-ringing ceremony.

CVSL (CVSL—NYSE) made company history Wednesday at the New York Stock Exchange, where executives and salespeople participated in the ceremonial ringing of the bell to signal the end of trading.

The Dallas-based direct selling conglomerate has built a portfolio of eight independent businesses—including The Longaberger Co., Tomboy Tools, Agel Enterprises, Paperly, and others—which benefit from combined back office expertise as well as centralized business operations and services. Shares in CVSL previously traded over the counter on the OTCQX, but the company uplisted to the NYSE MKT in December 2014.

“We’re proud to be listed on the NYSE and we want everyone who is part of every CVSL company, including our independent sales force, our employees and our shareholders, to feel part of this special moment,” CVSL Vice Chairman and CFO, John Rochon Jr., said in a statement.

Colleen Walters, Founder and CEO of CVSL-owned Your Inspiration at Home, an award-winning maker of gourmet spice blends, did the honor of ringing the bell at the close of trading. Top-performing salespeople from other CVSL brands qualified for a trip to New York City and joined Walters at the famed podium.

CVSL Issues First-Quarter Results, Misses Estimates

Dallas-based CVSL Inc. (NYSE MKT—CVSL) posted a net earnings loss in the first quarter amid efforts to revive the Longaberger business and execute an ongoing acquisition strategy.

CVSL completed the acquisition of health and household brand Kleeneze, one of the U.K.’s oldest and most prominent direct selling companies, at the end of the quarter. Taken into account, Kleeneze’s first-quarter performance significantly boosted top-line growth.

Combined quarterly revenue for Kleeneze and CVSL rose 20 percent to $32.0 million in the first three months of 2015. Reported revenue fell 27.9 percent across CVSL’s other business units.

On a pro forma basis, the direct selling group posted a net loss of $5.2 million, or 17 cents a share. On average, analysts had expected a loss of 7 cents a share. Gross margin increased to 60.6 percent from 51.3 a year ago.

The biggest factor in CVSL’s results was an ongoing turnaround at The Longaberger Co., said CVSL Vice Chairman and CFO John Rochon Jr., who took on leadership of the struggling household brand when CEO Tami Longaberger resigned earlier this month. “At Longaberger, we spent the first two years solving fundamental problems that we inherited. We had to focus on reducing bloated SG&A costs and paying off bank debt to bring Longaberger out of danger. Now, we’ve begun turning our attention to stabilizing the revenue line.”

The latest turnaround measures are aimed at reestablishing Longaberger as a premium brand by putting a halt to heavy discounting, reining in inventory and closing the brand’s outlet stores.

In the report, CVSL management also noted that Your Inspiration At Home, a maker of spices and other gourmet food items, is tracking to exceed $15.6 million in revenue this year. When CVSL acquired the Australian brand in May 2010, annual revenue was about $1.3 million.

2015 DSN North America 50 List

The DSN North America 50DSN Announces the 2015 North America 50!

This marks the sixth year for the Global 100 list of top direct selling companies in the world, and we would not be Direct Selling News if we did not continually strive to raise the bar.

That is why we are pleased to share with you a new component of the project this year: The North America 50. As a subset of the Global 100, this list draws attention to the most significant players in one of the world’s largest direct selling markets.

As DSN embarks on the annual research for the Global 100, we continue to refine the process as we identify the largest companies and acknowledge their achievements while bringing attention to the magnitude of the direct selling industry as a whole. Within that context, the impact that North American companies have on the global marketplace as well as on those that buy and sell through this channel cannot be overstated.

The following contains the North America 50 ranking for the 2015 DSN Global 100 (based on 2014 revenues). Both lists will be published in the June issue of Direct Selling News.

2015 Rank

Company Name

2014 Revenue

1 Amway $10.80B
2 Avon $8.9B
3 Herbalife $5.0B
4 Mary Kay $4.0B
5 Tupperware $2.60B
6 Nu Skin $2.57B
7 Ambit Energy $1.50B
8 Primerica $1.34B
9 Stream Energy $918M
10 Shaklee $844M

Click here to see the rest of the DSN North America 50 List.

President Michael Somoroff Steps down from Longaberger

President Michael Somoroff has exited the Longaberger Co. after six months with the CVSL-owned brand. Longaberger did not elaborate on the decision, nor whether it is looking to fill the position.

“Michael Somoroff is no longer in a management position at The Longaberger Company,” spokesman Russell Mack confirmed to DSN in an email. “The company has a fine team at the Home Office, with Tami Longaberger and a very experienced management group. We also have a wonderful and loyal group of sales field leaders, and we have a strong supporting team at CVSL. So the leadership of Longaberger is in good hands.”

Formerly based in New York, Somoroff is also a photographer and filmmaker whose work has appeared in magazines such as Vogue, Elle and Harper’s Bazaar, and in commercials for Olive Garden and Red Lobster restaurants. He first partnered with Longaberger last April to help the brand reinvent its annual catalog, which now features merchandise alongside stories of the brand and its people in a magazine format, titled Storybook.

The Newark, Ohio-based basketmaker has cycled through seven presidents in the past decade, amid several rounds of layoffs that have reduced the company to a fraction of its former size. Somoroff succeeded Mike Trempe, who left Longaberger last June after a 15-month stint as President and COO. The position had remained vacant in the three years leading up to Trempe’s hire.

Dallas-based CVSL Inc. acquired Longaberger in March 2013, setting in motion its strategy to build a family of micro-enterprise brands. With the addition of U.K.-based Kleeneze this month, CVSL’s growing portfolio now includes eight direct selling companies. For the nine months ended Sept. 30, 2014, the parent company reported revenue of $75.3 million, up 53 percent over the prior year period, and a loss of $15 million.

UK-based Kleeneze to Join CVSL’s Family of Companies

CVSL Inc. is adding another direct seller to its line-up of brands. The Dallas-based company has signed an agreement to purchase health and household company Kleeneze from Findel PLC of the United Kingdom for $5.5 million.

Upon completion of the acquisition, CVSL will own one of the U.K.’s longest-operating and best-known direct selling businesses, which is also a founding member of the U.K. Direct Selling Association. Established in 1923, Kleeneze originally sold products through catalog, and now it offers household cleaning, health and beauty, home, and outdoor products through a network of more than 7,000 independent representatives in the U.K. and Ireland.

“Kleeneze has an extensive product line, a nearly century-long heritage, a well-known brand and a robust presence throughout the U.K. We believe Kleeneze will be an outstanding addition to our CVSL family of companies,” said John Rochon Jr., CVSL’s Vice Chairman and head of its investment committee. “Kleeneze gives CVSL a very significant presence in the U.K. and represents an important step forward in CVSL’s international expansion.”

By joining the CVSL family of companies, Kleeneze will retain its own separate brand identity, salesforce and compensation plan but operate under the support of a growing portfolio of companies that include The Longaberger Company, Your Inspiration At Home, Agel Enterprises and Uppercase Living.

“Becoming part of the CVSL family of companies will open an important and exciting new chapter in the long, distinguished history of Kleeneze,” said Lisa Burke, Managing Director of Kleeneze. “This will allow us to be part of a global, public company, while at the same time maintaining our own unique identity. We view this as the best of all worlds.”

Closing of the agreement is anticipated by the end of First Quarter 2015.

CVSL Plans $60 Million NYSE Uplisting

IPO investment manager Renaissance Capital has reported the terms of CVSL’s planned uplisting to the NYSE MKT. The direct-selling conglomerate underwent a quiet period after filing with the Securities and Exchange Commission to raise capital in its uplisting bid.

CVSL is looking to raise $60 million with an offering of 6.7 million shares priced at $8 to $10. That would place CVSL’s midrange market value at $308 million. Shares in CVSL are currently traded over the counter, with a market value of about $293 million on the OTCQX.

To comply with NYSE MKT terms, CVSL last Friday implemented a 1-for-20 reverse stock split of its common stock. Though it had no impact on the par value per share, the split reduced CVSL’s shares of common stock from 487,975,986 to approximately 24,398,800.

CVSL has built a portfolio that now includes seven direct selling or “micro-enterprise” companies across the home improvement, gourmet foods, skincare and nutrition industries. The brands operate independently of one another, while benefitting from combined expertise and efficiencies in finance, IT and the supply chain.