Transcripts For CNBC The Profit 20240713

Im marcus lemonis, and i risk my own money to help businesses. I love investing in american businesses. Woman 2 i work here because i care. Lemonis its not always easy, but i do it to create jobs, and i do it to make money. Do we have a deal . Lets rock and roll. Man yeah lemonis this is the profit. Ive always been interested in investing in the multibilliondollar Leather Industry because it allows for great margins and great sellthrough. About a year ago, i received an application from a Company Called lumillamingus, which was started about 6 years ago and continues to struggle. How are you . Lulu hi im great. How are you . Lemonis im marcus. Lulu oh, its so nice to meet you. Lemonis are you lulu . Lulu thanks for coming. I am lulu. Lemonis nice to meet you. Where are you from . Lulu guess. Lemonis wherever heidi klum is from. Lulu no, denmark. Shes from germany. Lemonis okay. Lulu yeah. Lemonis its not that far. Lulu close enough, close enough. So this is actually the production facility, and they have a couple of different clients. Im one of them. We have our leather sourcing next door. This is where we design, so we have everything made here and shipped out of here. Lemonis so this is the equivalent of a copacker. This is your manufacturing partner. Lulu thats exactly right. How we designed it up until now is, we actually have a core collection, and we really dont go with trends. We try not to follow trends. Were definitely more classic. Lemonis is that you or the business . Lulu me. Lemonis okay, because im going to keep asking you that. Lulu uhoh, okay. Lemonis yeah, uhoh is right. Lulu oh. Lemonis i find it odd that lulu tells me right out of the gate that she doesnt follow trends. Now i know that theres this idea about being unique, and thats fine. But can you be unique and follow the trend . Lulu this is florence, our production manager. Florence, this is marcus. Lemonis how are you . Florence hi, marcus. Im florence. Lemonis nice to meet you. Florence nice to meet you, too. Lulu shes produced for us from day one, from 2013. She did my very first sample. Lemonis are you also a patternmaker . Florence yes. Lemonis you and i are going to be really good friends. Florence oh, you think so . Lets see that. Lemonis why did you get in this business . Lulu i was trained in haute couture from a designer in paris, actually, a danish designer. My whole life, ive always, like, sewn my own clothes and sketching and done art. Lemonis are these all yours . Lulu yeah, they are. This is. Weve been working with goop for about 3 years and have done custom collections for them. This is one of theirs. Lemonis my First Impression of the actual product is that it seems to be of good quality, and it doesnt look like lulu is skimping on the quality of the leather or the quality of the hardware. So where is your core collection . Lulu we have a core collection. Lemonis a shopper . Lulu yep. Lemonis the large pouch, clutch. Lulu mmhmm. Lemonis the small clutch, the sack. Lulu and then weve got the jackies. These are the crossbody that also becomes a bum bag. Lemonis is Everything Black . Lulu we have to have the black always. Lemonis you dont like color, huh . Lulu i dont love color. I just dont like it. Like, this has sold super well with us. Lemonis so, lulu, what i would ask you to think about is, the bags that you design, you cant just do black on black on black on black. In order for lulu to ultimately grow her company, shes gonna have to establish a Customer Base and then get them to repeat their purchases. And in order to repeat purchases, shes gonna have to innovate with color, shape and size and materials. What are those price points . Lulu most expensive is around 400 retail. Lemonis i think thats dangerous. The consumer is gonna say, for the same amount of money, im gonna buy a brand. Lulu thats our exact conversation all the time. Lemonis the numberone impediment to growing this business is getting the perceived value of the product right. I know its a goodquality product, but shes not clearly telling me why the price is justified. Can we see the sourcing . Lulu yes. You want to go next door . Yes. Lemonis the kind of elements that im looking for are little items around hardware zippers, the lining on the inside, anything that you can think of thats a detail that somebody would notice and see value in. This is awesome. Shawn as far as some of the higher ends, we have this product called atlantic. This is what we call as one of, you know, highest quality. Lulu we use this. Shawn on average, youre looking at about 7 to 7. 50 per square foot. Lemonis lulus resource, united leather, is over 20,000 square feet with 15,000 different types of leather. Honestly, it proves that she knows how to surround herself with good people. How many square feet does it take you to make a typical bag for you . Lulu well probably use maybe 10 square feet. Lemonis maybe or for sure . Lulu i dont know the exact number. Lemonis lulu. Lulu i know. Lemonis every one of your patterns should have a material quantity. Lulu yes. Its not a really beautiful system, but we do have it. Lemonis its an ugly system, but its accurate. Lulu its accurate. Lemonis who owns the Business Today . Lulu i own the majority. Lemonis okay. How much money have you put into the business from the beginning . Lulu so, scott, my husband, we put roughly 175,000 in. Lemonis wow. Lulu this is really where i think i need a lot of help because weve lost a lot of money trying to promote the company. Lemonis do you have any financials with you . Lulu i do. We can go up here in the showroom. Lemonis okay. Lulu im gonna go grab them. Lemonis okay. Lulu alright. Lemonis so one compliment the preparation that you have ready. Lulu oh, thank you. Lemonis the fact that you have a folder. It has your name. It has my name. You put some thought into it. You put a brand presentation. Lulu i put a lot of thought into it. Lemonis well, you would be one of very few. Lulu well, this is very important to me. Lemonis this is the financials . Lulu yeah. Lemonis look at the revenue. 2016, 69,000 in revenue. Im a little confused on why the cost of goods was higher than revenue, and you showed a negative gross profit. Was that because you were building inventory . Lulu because you have inventory. Yeah, you havent sold everything. Lemonis well, its just the way youre accounting for it. Lulu yeah, and its actually very confusing because also, at the end of the year, we show. Lemonis youre cashbased instead of accrual. Lulu thats right. Lemonis you got to fix that. Cashbased accounting is when you actually record things as cash leaves the system, so if you buy inventory, you record it as an expense instead of recording as inventory and then recognizing it when it sells. Accrualbased accounting is when you set up that cash on your Balance Sheet in the form of inventory, and you only recognize that inventory when the product sells. The irs doesnt like cashbased accounting because you can actually inflate your losses when youre actually making money by just building up inventory and expensing it. So in year 1, you lost 51,000 on 69,000 of revenue. In year 2, 117,000 of revenue, lost 55,000. In 2018, 58,000 of revenue, lost 26,000. Im alarmed because the fact that she had nice growth in year 1 and 2 and then literally fell off the cliff in year 3 tells me that theres a possibility that lulu isnt designing products that will get customers to come back on a repetitive basis. Lulu its hard to go back to the same customer, you know, several times a year and have her buy a handbag. Lemonis so black is core, no problem, but core isnt gonna get you to a million bucks. Where are you sold today . Are you in. Lulu mainly through us. Lemonis direct to consumer. Lulu direct to consumer. Lemonis and how about any Department Stores . Lulu no, we. Lemonis any boutiques . Lulu were in goop, in their boutiques, and then were in small boutiques. Lemonis can you explain the name to me . Lulu yeah. When i moved here, i had an idea of what my children were gonna be named one day when i had children. Lemonis okay. Lulu my girl. Lemonis do you have children now . Lulu i do. Lemonis oh, wonderful. How many . Lulu i have three. Lemonis wow. Lulu yeah. So my girl, my first girl was gonna be named lumilla, which is a danish girls name, and my boy was going to be named mingus. The reason why theyre not named this is because i married an american, and he goes, there is absolutely no way, so this is why i named my company. That is one thing he couldnt decide. Plus, it makes you think about it. Lemonis right, but not as it relates to handbags. Lulu but youre remembering it, though. Lemonis im gonna go ahead and take a hard pass on this, okay . When i hear the word mingus, i think about me as a kid, and when i was in school, they would call me mucus. That wasnt very fun. I cant imagine what mingus would be like. Fungus . Lulu thanks, marcus. Lemonis take care. Thank you. Lulu nice to meet you. Lemonis you, too. Hello. Lulu hi. Lemonis how are you . Lulu good. How are you . Lemonis good to see you. Lulu nice to see you. Lemonis oh, my god. How are you . Scott great to meet you. Lemonis nice to meet you as well. Scott sorry, i cant get up. Im trapped, trapped. Lemonis i like the fact that lulu and her husband are together on this idea for the business. Theyve put together 175,000 in it. Because hes involved, i definitely want to meet. Whats your background . What do you do for a career . Scott pretty diverse professionally. Ive worked at nike. It was manufacturing overseas, and then i started my own business. Its based out of london. Lemonis what kind of business was it . Scott a shipping business. Had it for 10 years, sold it. Im a realestate developer now. Lemonis thats awesome, right . Scott growing my own business, and its busy, which has sort of segued back into lumillamingus. Lemonis you had to, like, almost struggle to say it. Scott lm. Lemonis why are you rolling your eyes . Scott were not going to go there, are we . Lemonis oh, were definitely going there. Lulu oh, well be going there. We might as well just go there. Lets, like, get it over with. Lemonis well, because its hard to say. Do you have an opinion about the name . Scott do i have an opinion about the name . Lemonis yep. Scott is it lunchtime . Its lunchtime. Lemonis you dont want to name your son mingus . Scott didnt happen. Lemonis one of the things that i wanted to do with the three of us is just to really understand how the business integrates into your guys family life. Scott shes a fantastic mom, but she wanted to keep her identity as a professional woman. Lulu we had, kind of, three kids shortly after each other. I love being a mom, but its frustrating. You get. You feel defeated. You feel like youre not good enough. Like, its really hard, and i wanted to keep my fashion background and training, so thats kind of how handbags came about. And i love handbags myself. Scott i was supportive of that as long as we could handle the home front. Lemonis yeah. Scott and thats where. Lemonis finding that balance. Thats hard for any parent. Lulu its a hard balance. Scott i think its really a testament to her not letting go of her passion, so. Lemonis any time i meet somebody that has their own skin in the game, thats a meaningful thing, and you guys did it as a family. Youre definitely committed to it. Lulu im very committed. Id rather not do it if its halfass. Lemonis it was awesome meeting you, by the way. Scott great to meet you as well. Lemonis really nice meeting you. See you in a little bit, okay . Lulu okay. Lemonis hey, guys. Lulu well, hey. Lemonis after really doing a little bit more research on lulus financials and the Leather Goods industry and after meeting her husband, scott, i asked for the two of them to meet me at my office to really sit down and understand if there was a deal to be done here. If were gonna make money, we want to start now. I want to invest is somebody whos good like you are, but i think youre allergic to math. Lulu that might be. I dont like math. Lemonis of all the things that people could say to me, they could call me names. They could tell me how ugly i am, how mean i am, but they cant tell me they dont like math. Lulu but we cant all love math. Lemonis then dont be in business if you dont like math. Now we have to get down to the brass tacks of it all. What do you think your business is worth . Lulu i think its worth around half a Million Dollars based on, you know, my revenue this year, my profit, but i think the major value is in me, my connections. Lemonis its got 25,000 of tangible net worth between cash, inventory minus the liability. So im having a difficult time putting a big value on it. What do you think, scott . Scott shes got a proven client base that continues to come back, so as long as shes designing, i think she can repeat that business model. Lemonis i think my only concern in investing in lulu is, shes been doing this for 6 years, and i have to try to figure out what she has done wrong thats going to change because i dont want to be part of losing 175,000 more over the next 6 years. Lulu what youre investing into is the launch of this new, amazing brand. Lemonis okay. How many bags do you think the Company Needs in stock . 500 . Lulu i mean, that would be amazing. Lemonis so how much would be 500 be . Lulu 75,000. Lemonis so thats number one. Whats the second thing the Company Needs . Lulu well, then you need the research and development. Its between 500 and 1,000 for one sample. Lemonis so lets say 10,000. Lulu okay. Then you need marketing. Lemonis lets put 25,000 in there. Lulu and then you also need photo shoots, right . Lemonis creative, artwork, digital video content. Lulu mmhmm. Lemonis so another 5 grand . Lulu yes. Lemonis so to have plenty of inventory, plenty of research and development, plenty of marketing and plenty of creative stuff, thats 115 grand. The best deal that i could make is 115,000 for half of the business, and thats honestly more than i want to pay. Im not doing anything with mingus in the name. Lulu thats probably where youre making the biggest mistake. Its either the assucertification process. Or it isnt. Its either testing an array of advanced safety systems. Or it isnt. Its either the peace of mind of a standard unlimited mileage warranty. Or it isnt. For those who never settle, its either mercedesbenz certified preowned. Or it isnt. The mercedesbenz certified preowned sales event. Now through march 2nd. Only at your authorized mercedesbenz dealer. 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So, what are you waiting for . Switch today. For people with hearing loss, visit sprintrelay. Com. For half of the business. Lulu okay. Lemonis i would want to have a fully developed line in three styles. Lulu three styles, new silhouettes. Lemonis yes, a whole new offering. We should mandate that the quality and the process be right, which im sure they will be. Lulu okay. Lemonis . A showroom that will rep the products. Lulu okay. Lemonis . A new name. Im not doing anything with mingus in the name. Lulu thats probably where youre making the biggest mistake. Lemonis so how does that sound to you . Lulu it sounds very exciting. Its. Im thrilled. This is fun. This was not fun. This is fun. Lemonis well, hopefully by the end of this, youll say the opposite. Lulu by the end of it, ill love math and colors. Ill love it all. Lemonis math and colors. Lulu yeah. Lemonis who am i making the check out to . Do i have to actually. Let me just see if i can. Lulu watch it. You will one day have a dog, and it will be named mingus. Lemonis i dont think the argument to convince me of the name is telling me that im going to have a dog named that. [ chuckles ] what do you say . Lulu im so excited. Thank you so much. Lemonis do we have a deal . Lulu wow, we have a deal lemonis okay. Lulu yes lemonis i wanted to invest in lulu because i can tell that shes got a keen eye for fashion, but she also has a High Standard for what quality shell put her name on. I like that. And this is what i want to leave you with. I want you to give me a dozen bags. I want to see something different. You cant just do black on black on black on black. Lulu darn it. Lemonis so i assigned her to create 12 bags, which is a ridiculous number. I wanted to created a pressure valve to see how she would use the resources that she had and what she would do to get the task done. Lemonis okay, guys. Lulu good stuff. Lemonis ill see you a little later, okay . Lulu thank you so much. Lemonis bye. Scott alright. Lulu should we go shopping . Scott [ chuckles ] lulu hi lemonis hi, guys. Scott hey, marcus. Lulu this is my dad, klaus. Lemonis how are you . Klaus hi. Lemonis i want to understand who im doing business with, and its clear to me that this is a family business, and in order to be invested in a family business, you have to meet the family. So what do you think of the name lumillamingus . Emmanoelle mingus is cool, but i think its cooler with just lumilla. Xander nothing should ever be named mingus. Lemonis whats the one thing you hope for your moms business . What do you want to see happen . Ava i really want it just to be able to succeed, and i really want to see my mom stays at home. Lemonis xander, how about you, buddy . Xander i hope, like, it grows enough so that she can hire people to do most of the stuff for her. Lemonis you think theres a lot on her shoulders today . Xander yeah. Lemonis its got to be tough to figure out how to balance being a wife, a mom and a business owner, but it shows me that shes committed to following through on whats important to her. Cheers to mommy cheers, cheers klaus skal lulu how do you think it should be . We want it round, but i do think we should make it a little more square, though . Its not gonna be the same silhouette. Lemonis how are you . Im marcus. Frank im frank. Lemonis frank, how are you . Frank very good, how are you . Lulu alright. Were back at the drawing table. Lemonis so what i really want to understand is, number one, whats the capacity that you guys can produce at, and number two, how do we drive down costs . How do we simplify the process . Youre gonna have a tech pack. Tech pack has all the measurements, all the tools, all the materials in one box that says, make this. A tech pack is a template with all the necessary components such as material, hardware, measurements, labels and directions that a manufacturer uses when building and producing a product. Whats the maximum number of bags that this workshop could produce on a monthly basis . Florence well, it depends how many. Frank 15 a day . 15, 16 a day . Florence if i do it fast and good, i can do 5 hours to do a bag. Lemonis and how much an hour in labor . Frank between 25 and 40 an hour. Lemonis how much . Frank 25 to 40 an hour. Lemonis 25 to 40. Frank yeah. Lemonis im not sure why frank and florence think that the range is okay to be 25 to 40. It costs a certain amount for an hour, whether youre making one thing or two things. This space isnt complicated. Final products are labor and materials. I know what the leather costs. Now, lets not play games on what the labor costs. And, obviously, if the size is smaller, this doesnt take 5 hours. Florence it does take the same time. Lemonis its the same. Frank yeah, the sewing and the amount of labor doesnt change much. Florence there is not much change. Lemonis so the efficiency is going to be in simple skus and high volume. Florence it depends. Lemonis im a little confused on florences inability to tell me how were going to improve the process, and what im starting to worry about is, how do we keep this Company Competitive in the marketplace if we dont have an open dialogue about price . What are the alternatives if we dont get to a real number here . You dont have a materials problem. Lulu nope. Lemonis its labor. Im anxious to see whats in here. Lulu im anxious for you to see it. Lemonis i asked lulu to meet me at one of my locations in chicago because i wanted her to show me the 12 bags that i asked her to create before i introduce her to a number of my buyers to get their feedback. Lulu so i know you really. Lemonis i like the camo inside. Lulu right . I was very anxious about it just because there was so much color on it. Lemonis mmhmm. Lulu so this one, just so much going on in one bag. Lemonis you mean three colors. Lulu yes, i strongly dislike it. Lemonis i do want to tell you that i am pleasantly surprised at how you executed the task. I feel like youve made progress. Lulu thank you. Lemonis now that ive gotten comfortable with what shes put together, im curious to see how my buyers are gonna react. If they dont like it, other boutique owners arent gonna like it either. Lulu hi, guys. Woman 3 hello. Woman 4 hi. Lulu this is so exciting. Im so happy to show you guys my collection. My name is lulu eschelman. My company is called lumillamingus. Cathy lumillamingus. Becki its way too long. Cathy its a mouthful. What about just lumilla . Lulu yeah, i thought about that, too. Becki lumillas pretty. Lemonis why dont you guys jump in and touch and feel and. Pam thats cute. This is a great bag. I love this color combo, gorgeous. Lulu i hate that one. Deserie i like it. I think itd be cute in patent, if you did a patent version. Lulu if you simplify it. Deserie yeah. Lulu i just dont like this much going on. For me, less is more. Lemonis so youre at a trade show. What are you writing an order on . Yes or no . Deserie no. Pam no. Becki no. Lemonis yes or no . Deserie no. Becki no. Pam its too unconstructed. No. Lemonis okay. Im actually starting to get freaked out. None of them like what they see. If i cant convince them, i dont know if i just made a giant mistake or not. Yes or no . Do you have the patterns for all this . Lulu well, florence does. Lemonis all of your patterns for all of your bags are with florence . Lulu yep. Lemonis well, thats a problem. If youre looking to take your business to the next level, log on to. And you may know us from your very first sandwich,esh, your mammoth masterpiece, and whatever this was. Oscar mayer is found in more fridges than anyone else, because its the taste you count on. Make every sandwich count. Do you recall, not long ago we would walk on the sidewalk all around the wind blows we would only hold on to let go blow a kiss into the sun we need someone to lean on blow a kiss into the sun all we needed somebody to lean on the new xc90 plugin hybrid electric. Xc90. Recharged. A lot will happen in your life. Wrinkles just wont. Neutrogena® rapid wrinkle repairs fastest retinol formula works so fast. It takes only one week to reveal younger looking skin. Neutrogena® whats going on . Its the 3pm slump. Should have had a p3. Oh yeah. Should have had a p3. Need energy . Get p3. With a mix of meat, cheese and nuts. That little vent that its no wont stay open. Except it is. Thats why the vent is one more thing we check before a car can be a certified carmax car. The way it should be. Carmax. Pam absolutely. Its a good travel bag. Lemonis i love the quality. I love the craftsmanship. I love your work ethic. Lulu mmhmm. Lemonis you got these bags done in a short period of time. I didnt think it was possible, so in terms of effort, a. In terms of what your process is to bring something new to market, i think we just still have some work to do. Lulu yeah. Lemonis okay, ladies. Thank you. Lulu thank you. Lemonis appreciate it. Columbia college has been known for years as a place where designers can find out about trends, work with different textiles, and a lot of big fashion designers have actually come through here. One of the reasons that i wanted to take lulu to Columbia College is that historically, shes only worked with florence. Lulu oh, how cool. Hi, guys. Lemonis i want to get her in front of a dozen different designers. Lulu yeah. Lemonis so just so you guys know, im trying to get lulu to think outside the box, but i asked her to start thinking about color because she hates it so much. And theres one other word that she hates. Tell them that. Lulu i hate the word trend. Anthony consumers look for trends, so theres no way to sell something that their grandma also had, and it hasnt changed at all. Tristan you can definitely always take from the trend. You can always work on it. You can always make it your own. Lemonis even if its a small detail. Some idea, some color, something. Sean have you thought at all about exterior pockets on the outer. Lulu i havent, really. Sean retailers are able to charge 50plus extra dollars for that exterior pocket. Lulu yeah, so you would have it here, like a quilted pocket on the back or something. Sean exactly. Maria i love the mixing of leather, and i love the colors in that bag, and i think with that, you can bring in kind of all those textures together, mixing the shearling with those leathers that you have. Itd just be something thats very interesting, that you can wear that with your black winter coat, with your brown, you know, with a shearling coat, whatever. Lulu in a million years, i would never dream this up because its so busy to my eye, but i do actually think it could be really cute in a stripe. Lemonis what i liked about what i saw at Columbia College is her openminded willingness to listen to peoples ideas, which is the numberone key for a new entrepreneur. You guys were awesome. Maria thank you so much. Lulu so i just would like to hear what you think about creating, first of all, an order of 500 bags and kind of where you think we can get pricewise so that its profitable for everyone. Lemonis so later in the week, im bringing lulu to new york to work on new projects, but before we do that, i want her to sit down with florence and have an honest discussion about how they were going to improve the cost and improve the relationship overall. Florence its not because you coming with a big number that the bags is going to suddenly becomes, like, 2 hours to make it. Lulu yeah. Florence basically, you need 5 hours. Im not changing any of my price or anything. You never contest any of my price, never talked about money. Lulu nope. Florence so do you want me to work for free . Lulu no, i dont want you to work for free. Florence oh, okay, okay. You know . And if i give myself to this project, what is it that exactly im getting out of it . Lulu so youre uncomfortable continuing working on these samples without a guarantee. Florence thats it. Thats it. So we stop the process. Lulu i need a cocktail. Lemonis tonight, ive asked lulu and florence to meet me so we can discuss how were gonna grow the company more profitably so that its a winwin for everybody. Wheres florence . Lulu she didnt show. Lemonis what do you mean . Lulu we had a meeting thursday. She said, im not moving forward, and we cant. Theres nothing to really talk about until i get guarantees. She wants guarantees, of any kind of sample shes working on, she will be producing going forward. I mean, my entire line is put on hold. Lemonis when somebody asks for a guarantee, it always makes me nervous that the capitalism goes away. Youre my vendor. You charge me a premium. I will continue to pay it until i feel like i can get better quality or better price somewhere else. Lulu yeah. Lemonis and honestly, i didnt think her quality was that good anyway. Lulu she says, it doesnt matter if i do 10 or 1,000 bags, its still takes me 4 to 6 hours per bag. So your labor cost doesnt go down just because you give me a 1,000bag order. Lemonis florence essentially wants some absolute contract that says youre going to get the production for life. Heres how production works in manufacturing make a good product with good quality at a good price, you can have my business forever. Dont do one of those things, youre gonna lose my business forever. Do you have the patterns for all this . Lulu well, florence does. Lemonis for all your bags . Lulu mmhmm. Lemonis you dont have them on your computer . Lulu nope. Lemonis all of your patterns for all of your bags are with florence . Lulu yep. Lemonis well, thats a problem. As the volume goes, the price cannot stay the same. Florence im gonna tell you something. You still need somebody thats gonna cut your bag. I dont want to work for nothing. Wild thing, you make lemonimy heart sing. Patterns you make everything. Groovy. Done yet . Yeah, yeah, sorry, sorry. You sure . Hmm. Mmm. Come on, come on, wild thing. If you ride, you get it. Geico motorcycle. Fifteen minutes could save you fifteen percent or more. Oh no, here comes gthe neighbor probably to brag about how amazing his Xfinity Customer Service is. Im mike, im so busy. Good thing xfinity has twohour appointment windows. They have night and weekend appointments too. Hes here. Bill . Karolyn . Nope no, just a couple of rocks. Download the my account app to manage your appointments making todays Xfinity Customer Service simple, easy, awesome. Ill pass. For all of your bags are with florence . Lulu yep. Lemonis well, thats a problem. Lulu but i dont see why she wouldnt give them to me just based on. Lemonis well, she didnt show up. Lulu i know. Lemonis shes gonna say she owns them. The collateral, the asset that i thought i was investing in, i dont have control of. It almost feels to me like florence thinks she owns the designs. And the Lesson Learned is, we cannot be in a situation where youre vulnerable to one person. Lulu i agree. Lemonis . Ever again. Lulu nope. Lemonis in order to help relaunch lulus brand, im going to introduce her to Brand Assembly, which is a Unbelievable Company who helps Small Businesses in the fashion space. They provide distribution support through trade shows. Theres a great opportunity for brands that are just starting out to see a stream of traffic that they normally wouldnt see. Adam we have over 200 brands that show with us, all womens contemporary in various categories. Lemonis Brand Assembly displays multiple times a year at different markets, and there will be hundreds, if not thousands, of people that will see her products, giving her a pipeline of business. Lulu so i should go to the next shows in l. A. Lemonis i think its in january. Maybe we could be showing there. You just got to get the production thing resolved. Its my expectation that lulu be representing her product at Brand Assembly in a few weeks. Hi, david. Good to see you. This is my partner, lulu. I brought lulu to vsl print, one of the nations premiere packaging companies, to meet the owner, david. Im looking to dramatically elevate the way people perceive her product and justify the quality and the price. Lulu so we dont have a box as of today. David its a luxury attired handbag. It belongs in a box. Lulu it does belong in a box. It should be in a box. I agree. David it should be delivered in a box. And we actually did a few things for you guys to look at. Lulu fun. David this is a box thatll have magnets thatll hold that shut. Lulu i mean, this is very sleek, which i like. David you also could wrap the box out of a leather material. As far as durability, these boxes will last for 40 years. Lemonis whats the financial commitment . David in some reasonable quantity, anywhere from 4 a box up to 8 to 10 a box. Lemonis the longer that customer uses your box, the longer theyre gonna live in their closet. Lulu i love it. Lemonis next, im taking lulu to brandfire, a Marketing Agency that specializes in rebranding companies. Adam what we do here is, we help to try to create a brand or refresh a brand that is more aligned with the dna of the company and the founder. So lumillamingus, its a bit long. I like the idea of having your name associated with it, i mean, because in fashion, lets face it, theyre buying you. Lulu yeah. Adam so we looked at your clean lumilla. Lulu i dont know if its super bold. Lemonis the name needs to be secondary to you but complementary. Adam how can we take the idea and incorporate maybe one of these . Lulu milo . Adam milo. Lulu its just wild to see because i dont at all connect to it. The paint stroke, were on the exact same page. I love that. Lemonis so you guys will Work Together and try to come up with something. Lulu yes, i would love it. Adam yeah, wed love to. Lemonis and also, ive introduced her to a contemporary artist, rolland berry, to help her work on her creativity. Lulu oh, my gosh. This is insane. Lemonis she historically hasnt liked color at all. Rolland so he brought you to the place that has the most color in the world. Lulu totally. Rolland okay, lets paint. Lets play games. Lets paint. Lulu lets do it. Rolland all the way on, all the way up. Tighter, tighter, tighter. Not bad. Lulu ah rolland its okay. Im gonna calm her down for you, okay . Ready . Lulu okay. Rolland whoo lulu this is so cool. I learned to just bring out my inner artist. I love it. Lulu hi. Lemonis hi. Lulu how are you . Lemonis good. Unless a deal can be made with florence to solve the manufacturing issue, im not sure what the next step is because theres the show coming and production that needs to happen. I thought it would be good just to sit down and work it out. I know that there was. I dont know how you say it in french, drama. Florence not really drama. Frank drama . Lulu well, you were incredibly mad that day, and i get it. And i was also really. Florence i dont think you get it. I just wanted you to be understanding, which you were not. Lemonis what got relayed from her to me was, it doesnt matter how many we make. The price is gonna be the same no matter what. I was like, how could it be the same . Florence you know, we are handmade, one piece by one piece. Lemonis but if it only works for her, youre not gonna do it. Florence yep. Lemonis if it only works for you, shes not gonna do it. And if it doesnt work for the customer, nobody is gonna do it. Florence i dont want to work for nothing. Lulu were kind of playing around with different colors of the dust bag. Lemonis theres nothing to play around with. Lulu uhhuh. Lemonis not white. Sounds like a really good deal jake, from state farm at 3 in the morning . Who is this . Its jake, from state farm. What are you wearing, jake from state farm . Uhkhakis. Like a good neighbor, state farm is there. Uhkhakis. My body is truly powerful. I have the power to lower my blood sugar and a1c. Because i can still make my own insulin. And trulicity activates my body to release it like its supposed to. Trulicity is for people with type 2 diabetes. Its not insulin. I take it once a week. It starts acting in my body from the first dose. Trulicity isnt for people with type 1 diabetes or diabetic ketoacidosis. 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Only at your authorized mercedesbenz dealer. Well, audreys expecting. Twins grandparents we want to put money aside for them, so. Change in plans. Alright, lets see what we can adjust. Wed be closer to the twins. Change in plans. Okay. Mom, are you painting again . You could sell these. Lemme guess, change in plans . At fidelity, a change in plans is always part of the plan. Sounds like a really good deal jake, from state farm at 3 in the morning . Who is this . Its jake, from state farm. What are you wearing, jake from state farm . Uhkhakis. Like a good neighbor, state farm is there. Uhkhakis. That maybe didnt sit right with both of us, it felt like you were holding her hostage. Florence definitely, we had, like, a price issue, so this is where i start thinking. Frank [ speaks indistinctly ] at the end of the day, florence just want a guarantee that anything that happen with this venture. Lemonis that doesnt make sense to me. Im not sure i understand why a manufacturer believes that because they produce bags, they have a right to the production process. At the end of the day, everything that they made, they were paid for. Theyre contract labor, not contract designers. They dont have a patent on the business. They didnt design the bags, and theyre for damn sure not an owner in this business, so im gonna decide where the bags get made. And if the price isnt right, im gonna move the production, period. If she designs a bag, she shouldnt have to be obligated to make it here. If we find one bag, and we have to make 2,000, this facility isnt equipped to make 2,000. Florence no. Lemonis so we have to know, what happens if we have to make it somewhere else . Florence im very. Im good at my production, okay, because im looking everything one by one. Lemonis i think what got misinterpreted is, as the volume goes, the price cannot stay the same. Florence the problem is, we gonna go to three, four colors, and then maybe the lining is gonna be also three, four color. Its not that were gonna do 300 same bags. Frank yeah, we can do a lot of Different Things to save time. Lemonis and heres where were gonna disagree. Frank mmhmm. Lemonis i dont care what you think it should retail for. What i would say is, what we choose to retail for is up to her. What you choose to charge me is up to you. I dont want my manufacturer telling me what im supposed to be charging consumers. Like, if they want to be in the purse business retailing bags, go ahead, but dont tell me how to run mine. If we choose to bring that bag here, and you make it, it could be here one day, gone tomorrow. Then you know what you have . Capitalism. Lulu hold on. Lemonis so theres a term thats called an rfp, request for proposal. An rfp is a document that goes out into the marketplace that allows manufacturers to bid on a particular manufacturing job, and it often happens in a bidding process, sometimes closed, sometimes open. At the end of the day, the decision is made by the company to take on one of those manufacturers based on quality, price and terms. You may send an rfp out to nine manufacturers and say, give me a quote, and then you look at all of them, and you choose. Florence may be one that will be selected for an rfp. Lulu i just dont want this to happen again. Lemonis florence, do you like working with lulu . Florence what do you mean . Lemonis do you like working with her . Florence i loved working with her before. Lemonis past tense . Honestly, no bull[bleep] if this is not gonna work for you or for you, now is the time to know it. Lulu totally. Lemonis right now, and we can shake hands and move on. Okay. Thank you. After the fallout with florence, at this point, im just gonna find another alternative. So ive lined up a meeting at suuchi, a design and Manufacturing Company that has relationships with factories all over the country. I want lulu to know that as the customer to all these suppliers, shes calling the shots, not the other way around. The challenge we have right now is that lulus business has historically been reliant on one provider. Suuchi we have about 400 factories, so we do all of the steps production and warehousing and shipping. This is designed to be a highefficiency production house. Lemonis okay. As i walk around suuchis factory, im amazed at their capacity design, manufacturing, sourcing, logistics. I know we can drive down price. I know we can improve quality. This is the big leagues. Appreciate it. Thank you. Thanks again. Lulu well see you soon. Thank you so much. Lemonis hello. Lulu hello. Lemonis while the manufacturing is definitely at the forefront of all of our concerns, there are still a number of other issues that we have to get ready for before the big trade show. So where are you . Lulu ive got it. Lemonis okay. Lulu so have a seat. Lemonis okay. Lulu so first, the name is gonna be [sighs] lumilla. Lemonis look at that, wow. Lulu how pretty is that . Mingus is done. Lemonis why are you comfortable changing it . Lulu all the feedback that ive been getting. Lemonis i have to tell you that the thing thats been most enjoyable about the process is your openmindedness to other peoples ideas. Lulu this is such a huge opportunity, and its so fun. Like, this is what i like to do. Lemonis okay, so 2 weeks, Brand Assembly. Lulu so fun. Lemonis . L. A. Market. Lulu yeah, super excited. Lemonis . Big. The launch of lulus new product at the l. A. Market is just a few weeks away, and im anxious to see if she can actually pull all the parts and pieces together and have a successful show. Okay. Lulu yay lemonis couple weeks. Great job. Lulu i love it. Awesome. Lemonis ill see you. Lulu thanks, marcus. Lemonis bye. Brand assembly is where buyers from boutiques around the country, and sometimes the world, come to look at products. The goal there is to not only display the product, but most importantly sell the product. Lulu the fact that we have all these bags ready right now is nothing short of a miracle. Lemonis i havent seen the final product. I have no idea what its going to look like. This entire process has led to this one moment. Hi. Oh, my goodness. Its a masterstroke of heartache and redemption. The lexus nx. Modern utility for modern obstacles. Lease the 2020 nx 300 for 359 a month for 36 months. Experience amazing at your lexus dealer. I had so much doubt in me. A supervisor reached out to me on linkedin. 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Try it out and see the savings for yourself. So, what are you waiting for . Switch today. For people with hearing loss, visit sprintrelay. Com. She is on her way to our house. What . I got it. Alexa, start roomba. The lexus es. Eagerly prepared for the unexpected. Lease the 2020 es 350 for 389 a month for 36 months. Experience amazing at your lexus dealer. And with the leasesXfinity Stream app, 389 screen is your big screen. Which is free with your service, you can take a spin through on demand shows, or stream live tv. Download your dvrd shows and movies on the fly. Even record from right where you are. Whether youre travelling around the country or around the house, keep what you watch with you. Download the Xfinity Stream app and watch all the shows you love. Lemonis how are you . Lulu good. Welcome to lumilla. Lemonis oh, my goodness. While florence has been great in helping us get the final samples made for Brand Assembly, they still cant guarantee pricing. Suuchi, on the other hand, has given a 3year commitment to lock in price, so from this point forward, im moving the manufacturing to suuchi because i have guaranteed pricing and a guaranteed commitment. Lulu can you actually believe it . What do you think . Lemonis im stunned. Lulu ooh. Lemonis you know what i love . When you see it all together, all the sizes, all the shapes with the packaging. Lulu right . Lemonis it now is a clean delivery. Lulu it just feels so elevated to me. They all just look so luxurious. Lemonis im stunned. Lulu ooh. Lemonis look at that with the strap and the color. Lulu and theres gonna be little belt straps also. Lemonis so is red the choice now . Is that the interior . Lulu it is. Im really loving the red. Its been very well received. Lemonis so take me through one of them with the dust bag, with the tissue paper, with everything. Lulu yeah. So let me just grab one of the. Were kind of playing around with different colors of the dust bag. Lemonis theres nothing to play around with black with the same gold. Lulu uhhuh. Lemonis not white. Lulu yes. I wouldnt do white for this. This goes like this. Lemonis and so thats how we would create a training video for all the boutiques that buy it. Lulu yes. Lemonis . How to wrap it, how to deal with it, what are the things you need to do . Lulu yeah, i like that. And then actually, it will come with this to the store. This is the little paint stroke. Lemonis it should be black. Line sheet. Lulu line sheet. So these, were gonna get product shots, and were gonna get professional product shots. Lemonis okay. Remember, were gonna advance production. Lulu yeah. Lemonis were gonna have inventory in the next week or so. You want to be able to start shipping. Lulu yeah. Lemonis the kind of people that go to shows like Brand Assembly are boutique owners and hotels who want to buy product so they can resell it to the consumer. Woman 3 i love these. Whats the retail on this . Lulu so this is around 220, retail. Woman 3 okay. Lemonis im stunned, from the packaging to the little features and details on each product. Man 2 oh, this is so good. Lulu isnt it cute . Man 3 its so yummy. Lemonis . To her line sheet. Lulu so the blue one is wholesale 395. Man 3 okay. Lulu so really great prices. Man 3 yeah. Lulu and they last. Like, the quality, youll have year after year. Lemonis she really, in a matter of several months, pulled together a brandnew company with a brandnew product with a brandnew process. Hi how are you . Xander good. Emmanoelle good. Lemonis what do you like the most . Ava i like that bag over there. Lemonis you can show me. Lets see it on you. You think shell make you a bookbag with it . Lulu yeah, that could be your school bag. Lemonis in any entrepreneurs life, they give up a lot of their family life and a lot of their personal time to dedicate it to the business. I thought it was important that her entire family come so that they can appreciate all the work that shes done. They know their mom is a kickbutt momtrepreneur. Lulu you guys are so good. Youre so. Lemonis you guys are so adorable. Lulu and they have been so amazing because ive traveled a lot. Lemonis its okay to hug your mom. Come here. Watch this. Lulu group hug lemonis see, group hug. Are you gonna join us or not . Xander yeah, i. Lemonis alright. Thats awesome. Barb go[ laughs ] it real hard. Lemonis tonight on the profit, super sweet entrepreneur barb batiste. Barb barb. Let me give you a hug. Man 1 okay. Lemonis have you taught everybody to hug . Barb thank you. Lemonis . Is determined to parlay the success of her sweet shop into a beverageandfood empire. Its really good. With the help of her overzealous partner, theyve launched three distinct businesses. Holy moses, look at all this. And now theyve added a new one a canned teaandcoffee company. You guys are busy. But despite the backbreaking grind. Barb im dying. Im tired. Lemonis . They have yet to taste success. What do you get paid there . Kurt nothing. Lemonis . As the new businesses threaten to kill the old ones. If it costs you 1. 83 to make it,