Government’s ‘lack of clarity’ over exit plan causes Dorset-based company to offer staff the chance to move to new German factory

Lush has threatened to focus its planned expansion outside the UK because of the government’s “lack of clarity” over Brexit.

The British cosmetics firm said it is exploring options for growth abroad, blaming the government for not having a viable exit plan. It also revealed that more than 80 of its staff took up an offer to move to its new factory in Germany as a direct reaction to the result.

The company, based in Poole, Dorset, said last year’s referendum sent shockwaves through the business, in particular the 20% of its staff who do not hold British citizenship who “suddenly felt unwelcome and understandably upset”.

Lush, known for its fizzing bath bombs and ethical approach, offered those wishing to leave the country after the vote positions in its new factory in Dusseldorf, with more than 80 staff to date having taken the opportunity to move.

In a statement, the company said its focus in 2017 is to “look after and invest in” its staff, “particularly in the current political climate”. The group also warned that leaving the EU would mean higher taxes and could jeopardise expansion in Britain.

The statement said: “To date Lush has flourished from the freedom of movement of people and goods, and now we face uncertainty in both of these areas. The negotiation of new trade agreements could take years, but the risk is that we will be paying more import duties across the business.

“With Britain close to full employment and with a severe skills shortage we are concerned that restrictions on free movement of people will impact the availability of both the skilled and the unskilled restricting future growth in both our UK manufacturing and buying facilities.

“Having opened our new Germany manufacturing facility during the year we will be reviewing other options for growth outside of the UK. With little clarity on the government’s approach to the implementation of Brexit this remains a key uncertainty for the business going forward.”

In Poole, where Lush is headquartered, 58% of voters opted to leave. The company employs around 1,400 people in the Dorset town and 4,057 in the UK as a whole. About a third of those employed in Poole and 20% of its UK employees (782) are not British citizens.

Immediately following the vote, co-founder Mark Constantine expressed “grave concern” and a “sense of sadness at the loss of opportunity”.

The company, which has 928 stores across 49 countries globally, has not suffered so far as a result of the vote. Its annual results continued to show growth in both sales and profits.

Brand turnover rose 26% to 723.3m and group turnover rose 21% to 394.9m in the year ended 30 June 2016. Lush said pre-tax profit for the year to 30 June rose 76% to £43.2m, despite troubles in its Japan operations.

In terms of trading it said it had not noticed a material impact on UK revenues since the Brexit vote, and higher costs of raw material imports – a result of sterling weakness – were being offset by the cheaper cost of exports.

It also confirmed it would be paying the living wage, as set by the Living Wage Foundation, for all UK permanent staff from April 2017, and would be increasing parental leave and childcare funding benefits.