Lush Is In No Rush

By Julie Rawe/San Francisco

On a sunny afternoon in San Francisco's bustling Powell Street shopping district, swarms of spendthrifts bypass the Body Shop, which is empty except for the employees, to browse around Lush, a rival British skin-care boutique located a block away. With cakes of multihued soap piled high in the window, this whimsical cosmetics grocer packages its fresh, handmade lotions in what appear to be pints of ice cream--complete with sell-by dates--and arranges fistfuls of bath salts in produce-like pyramids of color. An overzealous employee is roaming the store, commanding shoppers to sniff the new Honey, I Washed the Kids soap, which, like most Lush products, looks and smells good enough to eat. "I actually licked a bar the other day," confesses the giddy young saleswoman. "For the first two seconds, it tasted like honey, and then it tasted like soap."

The same could be said about Americans' often all-too-brief enchantment with new stores, which explains why Lush founder Mark Constantine is in no rush to expand the brand in the U.S. His eight-year-old company, which installed its first U.S. store in December on Powell Street and opened a second last month in Boston, already has 210 shops in 29 countries. "Someone who's as international as us would certainly have a store in New York before they had one in Croatia," says the cheeky CEO, who gave rise to a skin conditioner called Buffy the Backside Slayer. "It's not a traditional global strategy, but it's one that's served us well."

Indeed, sales at the privately held company, based in Poole, England, have nearly doubled over the past two years, to $62 million, and the future is so bright that Lush offered to buy Constantine's much bigger former employer, Body Shop International, which has more than 1,900 outlets in 50 countries. After spending much of the '80s working on contract to develop products for the Body Shop, Constantine parted ways before the company got pounded in the U.S. by cut-rate copycats like Limited Brands' Bath & Body Works. In 2001, around the time Body Shop founder Anita Roddick described her creation as a "dysfunctional coffin," Lush's takeover bid was flatly rejected. But even with turnaround specialist Adrian Bellamy at the helm, Body Shop's comparable-store sales in the U.S. were still down 5% in 2003 from the previous year. Constantine, 52, says he has left the door open for future talks. "We hold the same ideals as Body Shop, but we've done it without all the plastic bottles," he says of Lush's ethics as well as its emphasis on pared-down packaging. The company's catalog, which promotes bars of solid shampoo and bare blocks of deodorant, color-codes ingredients to distinguish the organic from the merely natural. It also tags some 75% of its products with a "green blob" indicating "suitable for vegans."

Lush first made its way to North America thanks to brokerage scion Mark Wolverton of Canada's Wolverton Securities. While vacationing in London in 1995, Wolverton happened upon Constantine's irreverent new beauty deli and the following spring opened Lush's first joint venture outside Britain, in Vancouver. But it took Wolverton, 40, now CEO of Lush North America, six years to persuade Constantine to venture south of the border. "We honed our skills in rollouts in other countries," says Wolverton, "places that were less litigious, where there was less red tape." To help kick North America into gear, he gives store employees who meet monthly sales targets a bonus that sometimes matches their salaries, which may explain the soap licker in San Francisco.

His plan to ease into major U.S. cities was partly inspired by another cultish brand. Kiehl's, the iconic New York City pharmacy founded in 1851, waited 150 years to open its second store. Soon after being bought by L'Oreal in 2000, the company, whose products were already widely available in top-tier department stores, set up a stand-alone boutique in San Francisco. Kiehl's has since moved into a handful of other U.S. cities, but don't look for it in your local mall anytime soon. Likewise, by the end of next year, Lush plans to open an additional 100 stores worldwide, but only 15 of them will be in the U.S. "To keep the buzz," Wolverton says, "our strategy is to be slightly harder to get." He's using the marketing equivalent of a bouncer--increase access too much, and the appeal is gone--but as any good nightclub owner knows, it's hard to stay hip for long.