David Rosenthal: preference

Transcript context

…Essentially, there's consumer surplus in economic terms. Right. I said, I think they increased prices across the product range by about 7% per year. Where I got that from is if you look at the compounded annual revenue growth rate of Hermes for the last 10 years, the sixth generation era, it's 15%. Revenue has grown 15% compounded annually since Axel took over in 2013. They've increased production 7% per year. That's their stated goal. If you say, okay, of the 15% revenue growth, take out the 7% production growth, that leaves 7%-8%. That's got to be attributable to price increases, which I think this is the answer. Is it the right strategy? Probably it is the right strategy if you're thinking about, hey, this is a generational business, we're on the 6th generation. We want to ensure it's around for the 12th generation. Yes, we're leaving consumer surplus on the table here, because we don't want to be seen as that brand that is $100,000 handbags, even though they are $100,000 handbags. Right. Yeah, there's a fine line.…

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