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Wednesday, Jun 29, 2022

Direct-Seller Arbonne Focuses on Products After Bankruptcy

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Arbonne International LLC is getting a makeover.

The Irvine-based direct seller of upscale makeup and other items is revamping products and working on new ones after emerging from bankruptcy reorganization earlier this year.

The company’s formerly private equity-backed parent, Natural Products Inc. of Florida, went into bankruptcy in January amid heavy debt and a sales slowdown.

Now cosmetics veteran Peter Matravers is revamping Arbonne products and working on new ones. Chief Marketing Officer Adriana Lynch is freshening up packaging and logos.

The moves come under Chief Executive Kay Napier, who’s tasked with turning around Arbonne and growing its network of nearly 700,000 independent sellers. Most are women, including stay-at-home moms and refugees from Corporate America who turn their personal networks into customers.

Napier, a newcomer to direct marketing who joined about a year ago, sounds like a natural.

“I’d put Arbonne up there with anything else I’ve ever worked on,” she said. “It’s an amazing brand. It’s safe, pure and beneficial.”

Overcoming negative images some have of direct sales, or multilevel marketing, is one thing. Surmounting perceptions on top of bankruptcy reorganization is another challenge altogether for Napier.

She sees the bankruptcy as a closed chapter for Arbonne and is focusing on what’s been the company’s strength: products.

Arbonne is known for research and development into products that use botanical ingredients and are billed as pure and safe. The products trace back to a group of Swiss biochemists, biologists and herbalists in 1975.

The company has reworked its line of women’s anti-aging products—creams, serums and cleansers that fight wrinkles and other signs of aging. It’s also tweaked skincare products for men, including shaving creams, moisturizers and cleansers. There’s also a new line of advanced cosmetics.

Arbonne, which lost more than 500,000 sellers from 2007 to 2009, saw its first increase in April, Napier said.

“I really want to see this company grow and I think it has all the potential for growth,” said Napier, who previously held executive posts at McDonald’s Corp. and Procter & Gamble Co. “My goal is not to see another financial restructure.”

Arbonne had sales of $378 million for the 12 months through November.

The bankruptcy reorganization wiped away 80% of the $800 million debt at Arbonne’s parent, giving it a fresh start, Napier said.

A mix of banks, private equity firms and others—including GE Co.’s GE Capital, TCW/Crescent Mezzanine and EOS Private Equity—own Arbonne, sister company Levlad LLC in Chatsworth and parent Natural Products.

New York-based Harvest Partners Inc., which in 2004 formed Natural Products after acquiring Arbonne and Levlad, is out of the picture.

Arbonne was upfront about its financial problems, Napier said. The company posted online videos of her explaining the situation, sent out letters and connected with sellers through social media sites and speeches.

There’s never been a better time for direct sales, according to Napier, who recently gave a talk on why the model is working.

“In the past 10 years, there were more women wanting to work part time versus full time, more moms,” Napier said. “The economy has seen a lot of layoffs. Most great businesses are built during times like these.”

Higher Prices

But with many still focused on “value” brands, Arbonne—“a premium” skincare line—isn’t that. It actually raised prices with its latest products.

“That’s always a risk when you do that,” Napier said.

Sales of the latest lines are “hitting objectives,” she said.

“That just demonstrates people are willing to pay for quality, for what they like and what works,” Napier said.

Arbonne’s RE9 anti-aging line for women sells for $35 to $85. A set of all seven products goes for $323. The company’s prices are competitive for its niche, according to Napier.

Rivals include other direct sales companies such as Avon Products Inc. and Mary Kay Inc., and a slew of high-end names found in department stores.

The RE9 products, along with the men’s line, tout a Vitamin C formula for fighting wrinkles and smoothing skin.

Arbonne’s makeup uses “optilight technology,” which purports to make skin look smoother and feels lighter on the skin. Products in the line run $18 to $40. The men’s line is somewhere in between.

Product developer Matravers, who hailed from another botanical-based brand, Estée Lauder Cos.’ Aveda Corp., headed the revamp.

One thing that’s not changing: Arbonne’s direct sales model.

“There’s no better way to sell skincare and beauty products,” Napier said.

Direct selling gives customers that one-on-one attention and interaction, she said.

As for luring more consultants, Arbonne now has a DVD for prospective sellers. It’s full of energy and positivity, and stories of why others have joined the company. It features the face of Arbonne: President Rita Davenport.

The company has more products on the way, as well as its holiday catalog, and is putting more effort into nutritional products—vitamins and other supplements—with the hopes people will buy the products and sign on to sell them, too.

Don’t expect stars to pitch the brand anytime soon.

“I always say I don’t need celebrities,” Napier said.

A lot of Arbonne’s story is its sellers, according to Napier.

“Their stories amaze me,” she said.

Gomez is a former Business Journal editor and freelance writer based in Long Beach.

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