August 12, 2020

Lush UK Sues Lush North America/Canada Over Financial Mismanagement

Lush UK is allegedly suing Lush US/Canada. Weird right? Lush claimed in a lawsuit filed on July 7th that Mark Wolverton, CEO of Lush and his companies are breaching terms in a 2003 joint-venture agreement, which brought Lush to the U.S according to Biv.com.

According to reports, allegedly the lawsuit states that Mark Wolverton and his companies are guilty financial mismanagement due to accusations of funneling money from Lush’s U.S. operations into Canadian operations, which are controlled by Mr Wolverton.

The lawsuit alleged that, “Wolverton has outright refused to issue shareholder dividends despite that Lush would have been otherwise entitled to at least US$18 million and He has reduced excess cash by creating an unnecessary and bloated budget for capital expenditures; redefining payment terms to require the Lush U.S. corporations to make payments to other entities upfront; and funnelling funds to his own pockets, and to those of his personal company, under the guise of management fees.”

“Wolverton has been so adamant against allowing any corporate input from Lush that he has even denied the majority shareholder’s request to access and audit the corporate book.”

LUSH UK says that Mr Wolverton has blocked access to Lush directors from viewing Lush U.S. corporate information because the finances are intertwined with Lush Canada’s operations. Apparently it seems like Lush US runs under an entirely different agreement and is considered a separate company that’s not part of Lush Canada. It’s confusing I know considering Lush is manufactured, sold, and shipped from Canada to the US.

Since both companies are separate entities and the Lush director from the UK is not on the Canadian board but is on the US one Wolverton feels that she does not need to be privy to the corporation information for Lush US.

“There is no wall between team members to separate their work for the U.S. entities from that for the Canadian entity. And because the financial information and funds for the U.S. and Canadian entities are wholly enmeshed, it is unclear which corporation is paying for which expenses.”

There’s a lot going on here that doesn’t make sense since Lush NA continues to grow and is highly successful. Mr Wolverton is accused of other offenses in the lawsuit but the entire thing seems nonsensical.

It seems like there’s a lot of confusion about the separation of Lush NA and Lush USA. But it also seems like they could have easily settled this outside of court.

Does anyone feel the same?

What do you think of LUSH UK suing Lush USA.

Source

About the Muse

Isabella MuseIsabella is just an average everyday geeky girl who doesn’t blend her eyeshadow correctly, wears too much blush, and hopes she never finds her holy grail products because she likes the thrill of the chase so much. Her mission is to bring you super honest reviews on makeup, skincare, fragrance and all things beauty. She’s in no way an expert on the topic and she sure as hell isn’t a super model. But she’s passionate about makeup and is seeking like-minded individuals that like pina coladas, getting caught in the rain, and ones that enjoy spending hundreds of dollars at Sephora without feeling buyer’s remorse. If you’re that person feel free to reach out and leave a comment or follow me on Facebook, Instagram, Twitter, and Bloglovin‘.

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Comments

  • kjh

    I have insufficient knowledge to analyze this. But it strikes me that Lush UK did not structure the agreement between U.K. and US/CA with sufficient clarity and awareness of each country’s business regulations. That left loopholes that Wolverton may or may not have exploited. The international financial lawyers are paid enough to get these agreements right.

  • Lauren

    I’m here with popcorn for any kind of lush drama. Based on my anecdotal observance of the last few boxing day sale fiascos play out on social media, I recall some finger pointing between LUSH USA social media accounts and “Canada.” It always struck me as oddly public infighting as I really thought it was all one entity under Lush NA. This lawsuit seems to expose that the rift came from the top, not only between UK and NA, but also between the US and Canadian operations in a lot more than just separate sales sites and media. Maybe US is just jealous we don’t have a factory. I want to be a compounder.

    • Isabella Muse

      Ooo I didn’t see that drama. Lush is a British company and was founded/started in England as Cosmetics to Go. Big aka Mark Constantine, founder of Cosmetics to Go aka Lush Cosmetics, actually supplied recipes and products to the Body Shop in the 60s. Since the Body Shop had paid him a big sum for those recipes he wasn’t unable to open a Lush store due to the agreement between him and the Body Shop at the time and that’s where the Cosmetics to Go mail order came from. Lush NA was a long way off from this 🙂 The entire line was born and raised in England. It seems that most of the problem stems from the fact Lush NA is acting like they are their own entity but in reality they are still very much apart of Lush UK.

      • Tulips Tattooed

        “Since the Body Shop had paid him a big sum for those recipes he wasn’t unable to open a Lush store due to the agreement between him and the Body Shop at the time and that’s where the Cosmetics to Go mail order came from.”

        This isn’t accurate. Lush was created after Cosmetics to Go was closed. The products the Body Shop rejected and felt were not commercially viable became some of the early Cosmetics to Go. This is all detailed in a book Lush sells about the beginnings of the Cosmetics to Go.

        Also, Lush NA doesn’t act like it’s own entity any more than Lush Japan, Lush Australia or anywhere else there are Lush production facilities outside of Lush UK.

  • MDW

    Lush has very creepy business model and corporate culture. Beautiful products but the pushy salespeople are a turnoff. I know they are required to greet everyone but to be constantly on the customer’s arse had me boycott. Perhaps the pandemic has changed that.

    • Isabella Muse

      Bath and Body Works is likely that! It’s just part of their job so I guess we have to forgive them but it can be a turn off for sure! It’s one reason I like online shopping! No aggressive sales reps!