Multi level marketing Aussie homewares retailer goes bust after 40 years

A retailer that was one of Australia’s first major MLM schemes has gone bust after decades in business.

An Australian homewares retailer that has been in business for nearly 40 years has gone bust.

Lorraine Lea Linen went into administration on Monday although the business continues to trade.

Headquartered in Melbourne, the family-owned and run retail company has been a registered business since 1986.

The company is perhaps best known for its ‘Lorraine Lea’ themed ‘linen parties’ that were particularly popular in the 1990s as part of its marketing strategy, where it got ambassadors to host events to sell products to their friends and family.

In more recent times, these ambassadors have taken to social media, with hundreds of Facebook groups selling linen and other homewares branded Lorraine Lea.

As a result, the company is considered a multi level marketing business, or MLM, which is perfectly legal and involves providing sales representatives with a commission as a reward for selling the company’s products.

According to a news article from 2015, there were more than 40,000 Lorraine Lea parties being held a year and more than 300,000 customers.

The company claimed to have more than 1300 sales reps, which they called Lorraine Lea independent stylists, across all states and territories in Australia.

A Lorraine Lea line party.

Lorraine Lea has been selling linen and other homewares for 38 years.

Andrew Yeo and Tim Bradd of insolvency firm Pitcher Partners have been appointed as administrators.

Mr Yeo said in a statement to news.com.au that so far Lorraine Lea Linen has not shut down and “all the company staff have been retained”.

“The administrators are seeking to fulfil all orders outstanding prior to their appointment,” they added.

They have also kicked off a blitz sale of 50 per cent off storewide.

“Direct sales through the website since the sale went live late Monday afternoon have materially exceeded expectations,” Mr Yeo added.

“The administrators will continue to reassess how long the expected realisation process might take. Existing customers are encouraged to place any orders whilst stock remains available.”

Mr Yeo said they were looking to sell the business and interested parties should reach out.

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Lorraine Lea has launched a massive sale.

One sales ambassador took to Facebook in the wake of the company’s collapse, writing to the 65 members in her group: “I am feeling sad to advise you, my loyal customers, family and friends that today Lorraine Lea has entered into voluntary administration.

“I have been with this amazing Australian company for a little under a year.

“Lorraine Lea has been a ‘household’ name and provided its customers with exceptional quality products and top notch customer service for some 38 years!”

A number of retailers have gone bust in the last two years amid the economic downturn since the Covid-19 pandemic ended.

High-profile Australian fashion label Dion Lee collapsed at the end of May owing a staggering $35 million to creditors.

Last year, Australian prestige clothes firm Alice McCall went into liquidation. News.com.au reported that the company owed $1 million to creditors.

Home furniture retailer Brosa went into liquidation owing $24 million, including $10 million to customers from unfulfilled orders.

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Originally published as Multi level marketing Aussie homewares retailer goes bust after 40 years