Lush positioned for growth, despite full-year loss: analyst

Global beauty business Lush posted a £3.9 million (A$7.17 million) operating loss in the year to June 30, 2018, compared to an operating profit of £22.6 million ($41.54 million) the year prior.

The decline was due to the rising cost of goods, manufacturing, staff, rent and administrative costs, and a slowdown in the US market, which outpaced a 6.6 per cent increase in turnover on a constant currency basis to £524.4 million ($963.9 million) in FY18.

This reflects a 4.4 per cent in like-for-like sales and 9.6 per cent increase in online sales, compared to the previous corresponding period.

Still, GlobalData retail analyst Emily Salter called this a “solid year” for the brand off the back of its investment in stores and innovation.

“The retailer relocated 11 UK stores to larger units during the period which saw an impressive 39.6 per cent increase in like-for-likes, indicating Lush’s dedication to the offline channel as it seeks to further differentiate its unique offering and drive customers to stores,” Salter said.

Salter also pointed to the recent launch of a new global website, which she expects to bolster conversion and increase basket sizes thanks to the “more attractive, aspirational and easy-to-navigate site”.

She believes the brand is in a good position for growth due to its strong brand identity, and commitment to vegan and ethical practices.

There is a downside to this, however, as Salter said the brand’s focus on natural ingredients was partly to blame for the increased costs.

“The retailer must work to return to profitability in its current financial year, although the increased ingredient costs will be hard to navigate due to Lush’s focus on natural and good quality ingredients,” Salter said.

While performance in Lush’s largest retail market, the US, was disappointing – with declining footfall contributing to sales falling by 7.5 per cent – its UK business fared slightly better.

Lush Australia was contacted for comment.

Access exclusive analysis, locked news and reports with Inside Retail Weekly. Subscribe today and get our premium print publication delivered to your door every week.

Comments

Comment Manually

I have read and agree to the Terms and Conditions and Privacy Policy.

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Inside Retail Polls

How have private-label products impacted your business?
Vote

Twitter

The shock @LiberalAus victory over the weekend could be good news for Australia's retail industry #retail #auspol https://t.co/qFvHayoF2Q

6 days ago

A new initiative, announced by @google at #CopenhagenFashionSummit,will help to understand the environmental impact… https://t.co/VmLrRHHp3p

1 week ago

Rising competition and crude oil prices have impacted @CaltexAustralia net profits in the first quarter of 2019… https://t.co/OE4VaIIReR

2 weeks ago
x

SUBSCRIBE
FREE NEWS BRIEFS Get breaking news delivered