Luxury brands invest in stocks
People who do not buy luxury goods can feel their prices and costs vary greatly, as if in cordyceps/abalone prices bought eggs (nutritional value). And people often buy luxury goods, tend to think that the materials and workmanship of the product is worth the money. These two views, is made the far-left and far-right mistake. Perhaps, most of the consumers of luxury goods is not left not the far point of view, but they also don’t know about yourself why in pay. Before the breakdown cost, have to some basic concepts, such as
Above the company name is derived from the Google lenovo recommendation, I had no idea they basic statistics. Now know them each a different positioning of luxury, with luxury of H&M is only distant relations. In addition, these listed companies often have more brand strategy, such as LVMH’s sales only half is from LV series, the other half includes sales of red wine, jewelry and so on more than 50 other luxury brands. It is the most extreme a multi-brand strategy road.
Diagram shows, 50% of the overall gross margin is higher than common retailing of those brands. LVMH contains 50 other 65% is a brand of gross margin, so the margin of LV series is undervalued. In addition, Louis vuitton and Hermes has very strict price limit – they burn the finished product rather than on shipments. So their gross margin is not fully reflect the cost of manufacture. Take, for example, its inventory cost and destroyed one third of the cost. That is to say, it actually has sold the product gross margin of nearly 80%.
I purposely put five high-end luxury brands in figure 1, the upper part of the low-end brand in the following. Mid-range luxury goods such as MK, Bradley, its gross margin is obviously lower, which was related to its sales channels in the wholesale of high. Diagram, Coach both in gross margin, net profit and return on net assets is a special case, in recent years sales fell more seriously, also said the back alone.
Although see return on net assets, high-end luxury high enough, but obviously low. This is because the low-end luxury, or fashion enterprise asset turnover is high, or higher said same-store sales, which is a wider audience. Their product positioning, closer to the best stress point (on the bat about the location of the golden section point, don’t know where baseball to badminton, or table tennis hitting the easiest).
These most brand’s annual sales growth at about 10%, mainly reflected in the item and prices on the new demand in developing countries. According to these companies “confession” : because the materials used in luxury goods, all kinds of leather, crocodile skin and alien skin) supply is limited, the new demand from single product manufacturing costs rise, forcing enterprises rise in price. But I think, because the manufacturing cost is not the lion’s share of the sales, and the rate of increase in the price of some item in Europe and the United States more than 10% a year, so we can determine the price is not main material scarcity, but a may play a may get. Specifically, you can see the European and American people have normal reactions to the prices of luxury goods, which is to reduce the purchase, to buy new brand. This also explains the high return on net assets of the mid-range brand, as well as the MK annual growth rate as high as 50%. As for most of the luxury brand in the local same-store sales but there was no significant decline, it is probably because tourism shopping and buy on sb’s behalf “long-distance arbitrage”.
It is worth mentioning that luxury goods prices rise and fall, also conforms to the basic principle of supply and demand. LV by Japan in the 90 s, and now rely on China, come 10 years, if southeast Asia or Africa did not rise as scheduled, the cycle of prices are likely to break. Prices might image have a negative impact on luxury goods. 08 years before the financial crisis did not cause any impact to the luxury goods industry, doesn’t mean the industry don’t periodically.