Silpada Designs now says it has been losing money since 2010 in deciding to close

Thursday morning, Silpada Designs vice president Andrea Carroll corrected her previous statement that the company was profitable. She said in an email that it has not been profitable since 2010. As a privately owned business, its financial information is not public. Below is how the story originally appeared. Here’s our update.

Silpada Designs Inc. says it succumbed to an outdated business model — jewelry sales parties hosted at home — that had become unsustainable, though it was still profitable.

Women increasingly work outside the home, making sales parties more difficult to host than when Silpada formed in 1997 and even harder than six years ago when its business began to decline, said Andrea Carroll, the Lenexa company’s vice president of design, product development and marketing.

Carroll said shifting lifestyles meant established representatives not only found fewer party sites available but also recruited fewer new reps to maintain or expand the sales force. Silpada’s retail party business plan also battled the trend toward online shopping that is reshaping retail of all kinds.

Silpada’s revenue had been falling for six years, Carroll said, down as much as 30 percent for the Lenexa-based business. Silpada’s sales force had shrunk to 15,000 reps from roughly twice that total at its peak.

“The company was still profitable. It’s just that there were so many headwinds,” Carroll said at Silpada’s quiet headquarters Wednesday afternoon. “It really was very recently that … the board came to the stark realization that it just wasn’t sustainable.”

Silpada had been one of the area’s most successful startups. It had nearly 200 employees, many of whom were let go on Tuesday. A crew will remain on hand to liquidate the company’s inventory through the end of the year.

The company said its independent sales representatives will have through July 31 to sell Silpada jewelry and earn commissions.

Silpada’s confirmation that it would shut down at the end of July shocked reps, customers, fans and others with an economic interest in its coming summer season.

“Seriously?” said an Ohio-based event production manager who had hoped to bid on Silpada’s Kansas City convention planned for this July. “Holy granola.”

Silpada’s convention attracted 1,300 to the Kansas City Convention Center last year. Registration for this year’s now-canceled event was open through June. The company plans to refund registration fees and said it would work with those who had made or paid for travel arrangements.

Nancy Watanabe of Overland Park has been a Silpada representative for nearly nine years. She said it was business as usual until an 11:15 a.m. conference call with the board of directors on Tuesday, when she learned Silpada would be shutting its doors.

“No one has any hard feelings. You have to do what you have to do,” she said. “I’m sure they are as saddened as anyone.”

Watanabe lives near where Bonnie Kelly and Teresa Walsh founded Silpada as a home-based business. But she first heard of the company by attending a party in 2007. The jewelry immediately caught her eye and she became a customer.

Within weeks, Watanabe was a part-time sales representative while continuing to teach in the Shawnee Mission School District. When she retired from the school district in 2011, Silpada became her full-time business.

“I never had to sell anyone on the jewelry,” she said. “It was always fun, always upbeat.”

The suddenness of the decision was reflected in the “pardon our dust” signs taped to windows at the headquarters entrance. Silpada had been doing painting and renovations when its board decided to call it quits.

Carroll said no event or development triggered the board’s decision Tuesday to halt its business.

“There’s no good time to make these decisions,” Carroll said. “We just were not seeing any significant changes in business activity from period to period.”

Silpada had said in a statement that it began on Tuesday the process “of shutting down business operations and liquidating inventory” in the United States and Canada after 19 years in business.

The formal announcement came after some of the company’s sales representatives commented Tuesday about news of a pending closing on social media.

Silpada was founded in 1997 by Kelly, Walsh and Kelly’s husband, Jerry. The retailer grew to become one of the largest party planning sellers of sterling silver jewelry in North America.

It was acquired by Avon Products in 2010 for $650 million but was reacquired by the founding families in 2013 as Avon experienced its own business setbacks.

This year’s convention was expected to draw about 2,500 Silpada representatives to Kansas City on July 18-23, with an area economic impact of $1.5 million, according to Visit KC. The company first booked its annual convention in Kansas City in 2002 and, starting in 2006, made Kansas City its annual convention site.

“We are very appreciative of the business that they have brought to the community,” said Ronnie Burt, president and chief executive officer of Visit KC.

This story was originally published May 25, 2016 at 9:49 AM with the headline "Silpada Designs now says it has been losing money since 2010 in deciding to close."