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Edward Green Appreciation: Pictures, Info, and Where to Buy - Page 1902

post #28516 of 28890
I don't know if Edward Green is a net importer or exporter. However, regarding its import of raw materials, it will be considering more than just the recent weakness in sterling. It has to consider potential future currency downside and the real prospect of import (and export) tariffs being imposed in the event of a "hard" Brexit. The business environment is rather uncertain at present. Risks don't always pay off.

Furthermore, I doubt that production is as easily scalable as other posters suggest. English shoe factories are only semi-automated. They rely on highly-skilled people practising a rarefied craft. EG can't just open a factory in China and double production overnight. The lead time to replicate its current operation, if that's even possible, would be many, many years.
post #28517 of 28890
As a US EG retailer, the wholesale increases have led to basically no change in our dollar cost in a shoe. If it was worth it three months ago, why wouldn't it be worth it now? I also appreciate the my customers can't buy three pair on their next trip to London and save $500-$600. That would hurt our business. They have worked hard to adjust and balance costs world wide, and I would be less inclined to stock their shoes if it was otherwise.

I would certainly love for the prices to go down on everything I carry, but I wouldn't want to substitute raw material or production quality. While they are currently making shoes with leathers bought six months ago, they are also actively buying leathers for the spring shoes, and doing so with a weakened pound using the revenue from the current deliveries. I doubt they are in a position to have bought large futures in leathers, so they are actively experiencing increased costs in sourcing.

Again, when I saw the pound fall I was excited for the possibility of finding better value on the hundreds of EG shoes we buy. However, I don't think it's realistic.
post #28518 of 28890
Curious to know if other U.K. based shoe brands like JL, G&G, C&J and Trickers also have had to raise their prices as significant as of recent, or if this is something we are only seeing with E.G.
Edited by michaelvl - 10/8/16 at 9:14am
post #28519 of 28890
Fellows, I suspect price increases will take place at other brands in the near future. I believe EG has chosen to move early in case they need to make additional price/ operational adjustments.

All of these English shoemaking companies import materials from outside the U.K., making weakness in the pound sterling problematic for costs and stable margins. Managing a modern international business can be difficult, and I am relatively sympathetic about the challenges U.K. based businesses face in the wake of Brexit. Recession is a likelihood there.

There are a lot of EG customers who will continue to buy the company's wares despite multiple price increases. In my opinion, EG's larger challenge in the long term will be access to the Euro market to source materials and sell their goods without sizeable taxes on top of already high prices. In short, buckle up because future taxes and regulation have not yet entered the pricing equation.
post #28520 of 28890
I think it's mostly down to the fact that EG is positioning itself as a pure luxury product.

Price/quality is meaningless in that space, and all the non-SF people who buy EG are likely completely price insensitive.
post #28521 of 28890
Quote:
Originally Posted by Zapasman View Post

In a competitive market selling a relatively homogeneous product with elastic demand and limited pricing power, when one entrant raises prices the others can respond by
- raise prices
- keep or drop prices

The latter is a smart strategy with potential pay-offs
- take market share away from competitors thus
- clear inventory
- build loyal client base
- higher volume = lower unit cost (there're other factors but you get the idea)
- utilise excess capacity

Granted not everyone will do this but luxury products is a discretionary spend. I don't know the sales split but I'd bet that their legacy/hero models (Galway and Dover) account for an outsize %. These models are seldom discounted and high quality lookalikes (EB, AM) cost ~1/3. New buyers would be awfully tempted.

If EG is experiencing margin pressure on their RTW models-I highly doubt it with negligible inflation in the face of XX% price rises in <8 months, there are ways they can make it up thru
- trim the product line and bet on a few winners (ie Apple in the late 90s)
- stronger focus on MTO (ie via website)
- offer more exotic materials
- offer patina finishes
- find a niche and own it (G&G is a brilliant example)

All of the above have higher profit margins and help build brand loyalty.

My 2.5c worth.
Edited by benf - 10/8/16 at 8:14am
post #28522 of 28890
I think you guys are giving EG way too much credit for any type of thought or analysis that may have gone into their recent price increases. EG is a relatively small business that has never been known to be particularly well run or managed.

They probably realize that most of their sales are generated in the US and in other countries against whose currencies the pound has been falling. They are probably just looking to bring prices up to the point where there is no longer a Brexit discount for those outside the UK. They may also be thinking about the increased cost of buying materials outside the UK. But I really doubt they are thinking about their positioning in the marketplace or any other pseudo-McKinsey type armchair analysis that has been offered here.
post #28523 of 28890
Quote:
Originally Posted by smoothie1 View Post

Fellows, I suspect price increases will take place at other brands in the near future. I believe EG has chosen to move early in case they need to make additional price/ operational adjustments.

All of these English shoemaking companies import materials from outside the U.K., making weakness in the pound sterling problematic for costs and stable margins. Managing a modern international business can be difficult, and I am relatively sympathetic about the challenges U.K. based businesses face in the wake of Brexit. Recession is a likelihood there.

There are a lot of EG customers who will continue to buy the company's wares despite multiple price increases. In my opinion, EG's larger challenge in the long term will be access to the Euro market to source materials and sell their goods without sizeable taxes on top of already high prices. In short, buckle up because future taxes and regulation have not yet entered the pricing equation.

Perfecto!!.  Brexit is going to be very challenging for all those shoemakers.

post #28524 of 28890
Quote:
Originally Posted by atia2 View Post

I don't know if Edward Green is a net importer or exporter. However, regarding its import of raw materials, it will be considering more than just the recent weakness in sterling. It has to consider potential future currency downside and the real prospect of import (and export) tariffs being imposed in the event of a "hard" Brexit. The business environment is rather uncertain at present. Risks don't always pay off.

Furthermore, I doubt that production is as easily scalable as other posters suggest. English shoe factories are only semi-automated. They rely on highly-skilled people practising a rarefied craft. EG can't just open a factory in China and double production overnight. The lead time to replicate its current operation, if that's even possible, would be many, many years.
Fluctuation in margins is part and parcel of running a business. Raw materials account for only a percentage of production costs (my uneducated guess is <25%). On this basis, to explain a 25% price rise mean that raw materials has gone up 100%.

A small single digit price move is much more stealthy and less likely to be noticed. And more appropriate in these circumstances.

There're uncertainties around Brexit that no one can predict. But it seems clear that this price rise is purely opportunistic-wealth transferred from customer back to EG. So now rather than putting that 10% savings toward a 2nd pair, I'll only get one pair or none at all.

Capacity increases require long term planning. Training new staff would likely take only a matter of months. In any case for a company of their size, ensuring there's a ready pool of trained labour should be a part of their business planning. In the meantime I've little doubt there're operational efficiencies to be found.
post #28525 of 28890
Quote:
Originally Posted by ino68 View Post

Price/quality is meaningless in that space, and all the non-SF people who buy EG are likely completely price insensitive.

A fair point, on top of which their means have grown much faster than the CPI. Such indicators refer only to the plebs.
post #28526 of 28890
Quote:
Originally Posted by bry2000 View Post

I think you guys are giving EG way too much credit for any type of thought or analysis that may have gone into their recent price increases. EG is a relatively small business that has never been known to be particularly well run or managed.

They probably realize that most of their sales are generated in the US and in other countries against whose currencies the pound has been falling. They are probably just looking to bring prices up to the point where there is no longer a Brexit discount for those outside the UK. They may also be thinking about the increased cost of buying materials outside the UK. But I really doubt they are thinking about their positioning in the marketplace or any other pseudo-McKinsey type armchair analysis that has been offered here.

^^^^This. The real reason for the increase in the pound price is that the U.S. (and other currency) prices are WAY out of whack with the UK price. For ex. a GBP800 shoe at the current exchange rate should be USD995 but EG charges US customers USD1,220!!!! It is as if the Brexit never happened. EG knows people travel and so they can't have the UK price so low as they sell to a worldwide customer base who get gouged in their local currencies. What they really should do is lower the U.S. prices, but that would never happen.
post #28527 of 28890
Is E.G. in private hands or in that of investors?
post #28528 of 28890

I have long been an EG aficionado, and, I have been surprised by EG’s recent and significant price hikes.

 

.And, it seems to me that these price hikes actually preceded Brexit. 

 

I do not pretend to be an eminent economist or price strategist and this may be a very simplistic point of view. 

 

But, couldn’t it just be that EG is trying to cash in on their brand name by targeting a different and more luxury/fashion-oriented market? 

 

Slightly more fashion-forward offerings, significant price hikes, alienation of historical customers (and possibly lower quality over time):   To some extent, isn’t it what Prada with Church’s and JM Weston also did? 

 

Could EG be positioning itself to be taken over by some luxury conglomerate group?

 

What do you think?

post #28529 of 28890
Quote:
Originally Posted by cypi2 View Post

I have long been an EG aficionado, and, I have been surprised by EG’s recent and significant price hikes.

.And, it seems to me that these price hikes actually preceded Brexit. 

I do not pretend to be an eminent economist or price strategist and this may be a very simplistic point of view. 

But, couldn’t it just be that EG is trying to cash in on their brand name by targeting a different and more luxury/fashion-oriented market? 

Slightly more fashion-forward offerings, significant price hikes, alienation of historical customers (and possibly lower quality over time):   To some extent, isn’t it what Prada with Church’s and JM Weston also did? 

Could EG be positioning itself to be taken over by some luxury conglomerate group?

What do you think?

From a purely customer based perspective those were actually my thoughts.
I was thinking this may be going towards the Lobb/hermes direction

I have not really seen any quality problems so I cant comment there.

For EG right now they are on the upper border for what I would be willing to pay specifically for EG regular line.
I would probably be more flexible with some increase in TD.

EG is starting to creep up quickly to Lobb prices and if it comes down to it Lobb IMO is better --> controversial and subjective, just my opinion. Especially the prestige, which is still more expensive than EG.
The regular lines are now similar or same prices and for my money I would rather get Lobb --> again my preference and opinion
post #28530 of 28890
EG is a small sweet english company dealing with high quality leathers and luxury products (and making good money of course). If they want to sell I am sure there will be much interest in the market. Why did you mention JMW?
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