Lush is shifting towards a “sales driven mentality” to drive future growth, with plans to revamp its retail estate and invest in new platforms and campaigns to engage customers.
Outlining its “ambitious plans for growth” in its most recent filing with Companies House, Lush claims to have emerged from the Covid-19 pandemic with a “more profitable” business model and to now be in a position to expand the business further.
The retailer plans to strengthen sales in all categories with five new priorities: a revamp of its store estate, more “meaningful” campaigns, re-engaging with customers, carbon insetting rather than offsetting, and growth in international markets.
On retail, the business plans to introduce nine news shops in the year ending 30 June 2022, four of which have already opened, alongside eight relocations, of which three have been completed. Relocations will see stores moved to encompass a larger sales area of between 800 to 1,000 square feet.
Larger shops are also on Lush’s agenda in order to offer “enhanced” ranges, alongside a “wish” to see more ‘anchor’ shops of around 10,000 square feet, which will deliver “the ultimate Lush experience”. Why Lush follows ‘no rules’ when it comes to brand purpose
“This is not just about adding new shops for growth, but really building up the size of our stores so that they can accommodate new concepts,” the business explains.
“We are still very much committed to physical retail and will move quickly when the most exciting opportunities arise.”
Lush also plans to invest in more physical events, community activities and ‘Lush Times’ catalogues to “re-engage” with its customers through a “more human” approach. For the same reason, the brand aims to grow its YouTube presence, to use Twitter as its customer care platform, and to tap Pinterest for inspirational content.
The retailer won’t be present on any other social media platforms, however, having withdrawn from Facebook, Instagram, TikTok and Snapchat in November as part of its ‘Anti-Social Media Policy Pledge’. The company promised not to use these platforms until they have taken action to provide a safer environment for users. ‘Anti-social’: Why Lush is resurrecting its social media ban
Moving forward, Lush plans to “reinvigorate” staff and customers with similarly “meaningful, inclusive” campaigns.
Elsewhere, Lush outlines plans to grow across “all channels and in every market”, launching new website platforms in Poland and Taiwan by the end of June before opening shops in both countries.
The company says: “We have an even greater need to ensure that all markets have access to the same products, concepts and online features as our home market so that the strength of the brand is maximised in each market.”
All five priorities come as part of the ‘Lush Cosmetics Master Plan’, which has three main goals. The first is to make products for “every need”, the second is to be number one in every category and the third is to create a “cosmetic revolution” to “save the planet”.
Returning to profitability
Forced to close under lockdown when rivals like Boots were classed as essential retail, Lush reportedly saw sales fall by 25% during the pandemic, leading the beauty business to cut employee levels by a similar amount. During 2020 and 2021, the company received £38.7m in furlough payments and further emergency support.
Sales for the 2021/22 financial year are still tracking below pre-pandemic levels, however the business said it is seeing a greater return on the bottom line, while liquidity is “greatly improved”. Lush therefore had a “healthy” surplus cash amount of £26.7m at its traditional low point prior to 2021 Christmas trading.
The business says its opportunities for growth are “enormous”. Currently Lush’s brand sales are less than 0.25% of the global cosmetics industry.
“We believe a modern form of capitalism can co-exist with profitability; that we can operate high standards of business alongside our aspirations to become a real living wage payer globally,” the company says.
According to the Financial Times, the ethical beauty business recorded a pre-tax profit of £29m in its latest financial year, recovering from a loss of £45m the year prior. That said, turnover fell from £437.8m to £408.7m during the period.
Pre-Christmas Lush raised prices by 7%, with co-founder Mark Constantine pledging not to raise prices any further in the UK.
As of 30 June 2021, Lush operated 919 stores across 48 countries. The brand has written off its business in Russia, which spanned 48 locations, while its shops in the Ukrainian cities of Lviv and Dnipro remain open. The Financial Times also reports Lush paid $180m in Canadian dollars to take over its North American partner, a move which will add 80% to the company’s revenues.
Maintaining its focus on charitable giving, Lush raised £6.3m for charity and donated £3.9m to good causes during its latest financial year.