Last year, the cosmetics retailer Lush gave its managers bonuses worth £5m while receiving £5.1m from government assistance and reporting a 90% decline in profits.
The bonuses were added to the salaries of six employees at Lush Cosmetics (the main operating company) in 2022, including the cofounder Mark Constantine and his wife Mo, both shareholders, as well as six directors. Lush Cosmetics operates its manufacturing plant in Poole, along with 886 stores worldwide, including around 100 in the UK.
The company has been embroiled in an argument with Andrew Gerrie over his attempt to sell his shares of Lush. Lush is a cosmetics brand that is known for its environmental and social commitment.
Gerrie, the former chair of luxury confectioner Hotel Chocolat was the chief executive at Lush from 1995 until 2015. He claims that his Lush stake is now held by Silverwood Brands, an investment company he owns.
If Lush had decided to distribute profits as a dividend instead of a bonus, then it would have been required to pay a portion to Gerrie or Silverwood. Gerrie was not employed by Lush Cosmetics and therefore did not receive any of the bonus for 2022. Gerrie said that he wanted to sell his shares a few years ago.
Lush has been fighting Gerrie’s efforts to sell, and it was revealed on Thursday that the company had filed a new lawsuit in the High Court to try to prove that Silverwood Brands’ transfer of shares did not conform to Lush’s rules.
Employees at Lush, Cosmetic Warriors and other Lush-affiliated companies will receive £1.8m as bonuses in 2022. Lush stated that staff members (excluding directors and management) received an additional £14m last year.
Lush Cosmetics sales rose by 5%, to nearly £431m, in the year ending 30 June 2022. This is without a North American purchase, and despite the closing of 33 stores. Like-for-like profits before tax fell to £1.7m from £29m in the previous year. The UK sales were down by more than 10% on the previous year, before the pandemic. However, they are expected to increase at least 5% in 2019.
The majority of the financial assistance received by the company came in the form a business rate relief. This is a reduction of a company’s bill for business rates.
Covid, the Omicron virus variant and the conflict in Ukraine have all affected some of the company’s retail markets.
Lush believes Brexit may be to blame for the poor sales in EU nations, which were 28 percent below their pre-pandemic level last year. The UK had a deficit of 10 percent.
The annual report stated that “our popularity in Europe is certainly down since Brexit and we must rebuild the love for our UK-owned brands across Europe.”
It claimed that a factory it invested in after the 2016 referendum had lost money in part because of lower sales in Europe, where the UK’s departure from the EU still imposed additional “administrative” burdens.
Lush has said that its sales could have also been affected by the decision to withdraw from social media in 2021. The directors stated that they were “proud and committed” to their stance, and would not return to social media until proper measures have been taken to safeguard young people.