Before their return to the US, the Kinks recorded another album, Arthur (Or the Decline and Fall of the British Empire). As with the previous two albums, Arthur was grounded in characteristically English lyrical and musical hooks. A modest commercial success, it was well received by American music critics.Conceived as the score for a proposed but unrealised television drama, much of the album revolved around themes from the Davies brothers' childhood; their sister Rosie, who had migrated to Australia in the early 1960s with her husband, Arthur Anning, the album's namesake; and life growing up during the Second World War. The Kinks embarked on their tour of the US in October 1969. The tour was generally unsuccessful, as the group struggled to find cooperative promoters and interested audiences; many of the scheduled concert dates were cancelled. The band did, however, manage to play a few major venues such as the Fillmore East and Whisky a Go Go.
The band added keyboardist John Gosling to their line-up in early 1970; before this Nicky Hopkins, along with Ray, had done most of the session work on keyboards. In May 1970 Gosling debuted with the Kinks on "Lola", an account of a confused romantic encounter with a transvestite, that became both a UK and US Top 10 hit, helping return the Kinks to the public eye. The lyrics originally contained the word "Coca-Cola", and as a result the BBC refused to broadcast the song, considering it to be in violation of their policy against product placement. Part of the song was hastily rerecorded by Ray Davies, with the offending line changed to the generic "cherry cola", although in concert the Kinks still used "Coca-Cola". Recordings of both versions of "Lola" exist. The accompanying album Lola Versus Powerman and the Moneygoround, Part One was released in November 1970. It was a critical and commercial success, charting in the Top 40 in the US, making it their most successful album since the mid 1960s. After the success of "Lola", the band went on to release Percy in 1971, a soundtrack album to a film of the same name about a penis transplant. The album, which consisted largely of instrumentals, did not receive positive reviews. The band's US label, Reprise, declined to release it in the US, precipitating a major dispute that contributed to the band's departure from the label. Directly after the release of the album, the band's contracts with Pye and Reprise expired.