AS the pandemic took hold last year, there was a time when Lush boss Mark Constantine wondered how long the business could survive.
In the same week that Lush co-founder Liz Bennett â formerly Liz Weir â died, governments throughout the world forced shops to close.
âIt was really a bleak week. At that stage, I thought I just couldnât see how we were going to come through,â he says.
âObviously, if youâre mainly a retail business and all of your shops⊠How long have you got before you, you know? Six weeks, maybe two months. How long have you got?â
He recalled the failure of his mail order business Cosmetics To Go in 1994 and the Echo headline âCosmetics To Go has goneâ.
Back then, he was motivated by the words of Echo journalist Faith Eckersall, âwho said âIf Cosmetics To Go has gone, what on earth is wrong with the world?â and that encouraged me to get off my **** and do something elseâ.
âHave we just been through a similar feeling? Yeah, it felt like that, it felt like we were back there again in many regards,â he adds.
Lushâs losses in Covid
In accounts filed this week for the year ending June 30, 2020, Lush revealed that group turnover fell by 19.7 per cent to ÂŁ437.8million.
It recorded a loss of ÂŁ45.2m. Although ÂŁ37.9m was explained by accounting adjustments, writing down the value of assets and leases in âanchorâ stores, its chief executive acknowledges that âa loss is a lossâ.
The positive news, he says, is that in the 12 months since then, the business has become profitable.
Lush carried out the thorough review which the accountants call the âCovid rinseâ.
âWe were fortunate that we had some fat to cut out. We had practices that we could improve on,â he said.
âWeâve certainly gone through the Covid rinse. Weâre a lot more efficient than we were and when youâve got constant growth, by nature it tends to be a little bit of a fatter organisation.â
There were some painful cuts, with 215 redundancies, including 100 in Poole, 32 of them in the factories.
That leaves a total of 1,285 staff locally â 874 in manufacturing and digital fulfilment, 411 in support and retail.
Some changed jobs because their old role had disappeared, with many switching to dispatching online orders. âThere are people packing parcels who were organising train travel, there are people packing parcels who were doing other jobs,â says Mr Constantine.
âThose people who want to work for Lush and enjoy working for Lush looked to the future, have been adaptable, and thatâs made the difference.â
The year 2020-21 has been much better, he says. âWe already know that weâve restored profits to an extremely good level and weâve restored all our cash.â
The accountants did not require the company to flag up any uncertainty about the viability of the business.
âLast time they put a qualification in about Lush being a going concern. So we didnât get that this time â and they really were very vigorous, âDo this model, that model, every other modelâ âand as they pointed out, most of their other clients were not getting away with that.
âWe felt we were being rewarded for the hard work but thereâs still, as always, plenty of hard work coming up.â
How Lush lost sales but grew its digital business
Lush has lost 25 per cent of its sales in two years.
âThe interesting thing is cosmetics as a category have not reduced in their consumption. Other people have had our 25 per cent of the sales,â says Mr Constantine.
âBoots have had them, Superdrug have had them, supermarkets have had them. So weâve now got to work very hard to get them back because people have got into other habits over a two-year period.â
- READ MORE: Lush reports on coronavirus, Brexit and recession fears
Many people have had more disposable income, with no holidays or social life to spend on. âTherefore theyâre spoiling themselves a bit more and theyâre having things sent in, theyâre eating more chocolates and theyâre having more baths. If you canât go on holiday, you can take a bath,â he says.
âPeople have still been buying things but they havenât been buying from us because our shops were shut.â
Digital sales are expected to exceed ÂŁ100m in 2020-21, compared with ÂŁ46m two years before. They now account for 30 per cent of sales, compared with 10 per cent in 2018-19.
Lush, which has historically spent nothing on advertising, invested in paid search to drive traffic to its website. Mr Constantine says this was a way of protecting its trademarked name.
âOur competitors were paying for our name anyway," he says.
âIf someone impinges on that trademark in the physical world, we can do something about it, but if they impinge on it in the digital world, the laws are different and thereâs no strength to a trademark, so the only way you can strengthen your trademark is to pay for AdWords.â
Lush and the impact of Brexit
Lush and Mr Constantine have become known for an anti-Brexit stance.
He did not actually threaten to quit the UK under Brexit, as is sometimes suggested, but he did warn that there would be pressure to move parts of the business to the European mainland. He also said growing European markets would be served by Lush factories in the EU rather than expansion in Poole.
However, the pandemic has reduced Brexit to a âfairly mild irritationâ, he says.
Are Brexit warnings from JP Morgan, Lush and Siemens coming true?
âItâs very difficult to see where thereâs any benefit from it â and obviously I can see your readers now sharpening their pencils â but in the end itâs the red tape I think is just so onerous and the lack of opportunity for us to do things for Britain.
âWeâve got a superb team here, weâve been manufacturing in Poole for 40 years, so weâve got a hell of an expertise here.
âManufacturing in Germany or Croatia is great and itâs been fine but obviously we had the expertise here, we didnât need to do that, so itâs just irritating. Itâs just irritating, but is it as dire as Covid? No.
âHaving had a fundamental challenge to the total business, red tape and irritation with Brexit has paled into insignificance really but itâs still irritating and nothingâs growing from it. Itâs like watching a bit of your garden where nothing grows because itâs all tied up, itâs not working.â
How Poole could be the future of shopping
Asked about the future of bricks and mortar shops, Mr Constantine finds inspiration close to home â the Kingland parade in Poole.
Landlord Legal & General is allowing 10 independent shops there to enjoy two years without rent or rates. (One of them is Ă„nd Fragrance, selling the wares of Mr Constantineâs perfumer son Simon.)
âHow lovely to have that line of independent shops now in Poole,â says Mr Constantine.
âItâs stunning, isnât it? Thatâs definitely the future. How far-sighted of the landlords in doing that. Absolutely superb. Every set of landlords should be doing that.
âI think, of those shops, three of them are connected with ex-employees, all of whom we like to support, go along and buy stuff from them.
âIf every town incubates businesses like Poole is, how vital will things be in five yearsâ time? Not all of them will make it, we know that. Weâll try and support them and get them there but how exciting an environment. Then hopefully theyâll still want to see Lush in the high street and weâll be part of a very dynamic situation.â
As for his own shops, he says the immediate priority is to keep staff and customers safe.
âThe interesting is the customers that are coming in donât want to browse, they want to buy. Whereas when you have the normal relaxed state of affairs, people are enjoying a recreational form of shopping, what you get here is people coming in and buying what they want. Even at the door they know what they want. So you donât get so many customers but you do get the custom," he adds.
âItâs up to us to try to create an environment thatâs as safe, both for the staff and the customers, as possible and up to now weâve had plenty of guidelines from the government. Whatâs interesting now is as we go into this new arrangement where the governmentâs no longer going to provide the guidelines and we all have to make up our own minds, again it will be up to us to provide an environment that people feel safe in.
âWe have to have a mindset now which is entrepreneurial. This is the mindset we had when we started the business and you donât know whatâs coming.
âAnd thatâs quite difficult â to take off the cosy coat of predictability and go back into this wonderful world that is the real world. Itâs the real world thatâs uncertain.â
Diversity and the 100-year life
Lush says it has started work on âembedding equity and diversityâ, with a focus on sustaining support for the Black Lives Matter movement.
Mr Constantine says in the past âblack and Asian staff didnât feel comfortable in Poole a lot of the timeâ.
âWeâre not talking about just in the streets, although they found that too, but I think it's having communities or places where you feel comfortable. So weâve been working hard on that,â he says.
Aged 68, he says everybody's education should be lifelong.
âI think whatâs interesting, especially here in Poole, is we have quite an older population â including me â and the real challenge as you get older is to re-educate yourself. The education youâve got wonât do," he says.
He has been reading The 100-Year Life by Lynda Gratton and Andrew J Scott and refers to an actuarial table as he speaks.
âMy 14-year-old granddaughter has a 50 per cent chance of becoming 103," he says.
âSo if youâre going to be 103, youâve got to think about life slightly differently than âOff to school, do a job till Iâm X and then be retiredâ because you wonât have the money for a start.
"So thereâs 101 interesting things about the 100-year life, which is far more pertinent to everyone even than Covid and Brexit.â
READ MORE: Mark and Mo Constantine on the 20-year success of LushÂ
As for his own later life, he intends to continue being involved in the business and getting his hands messy.
âAs long as Iâm making a contribution, Iâd like to be here. Every now and then, I feel like theyâre wheeling me off. Thereâs just that slight feeling that everythingâs going on and youâre going to be dealt with in due course,â he says.
âI would like really, in my future, to be focused predominantly on product, because Iâm a formulator and because I make products, perfumes. If Iâm given an opportunity, thatâs the job Iâd like to do in Lush into the future.
âI always wanted that to be my, in a way, retirement job.â
Comments: Our rules
We want our comments to be a lively and valuable part of our community - a place where readers can debate and engage with the most important local issues. The ability to comment on our stories is a privilege, not a right, however, and that privilege may be withdrawn if it is abused or misused.
Please report any comments that break our rules.
Read the rules hereLast Updated:
Report this comment Cancel