Bite: Selling luxury in a tough market

0:00You're listening to a Shazie's podcast. Luxury Goods, when I looked at the market last week, you know, the likes of LV, MH, Kering, and these, they're all down, like four, five, six, seven, eight percent. It's a market where people are making some hard choices, so how is that heading at the moment? Yeah, so a couple of things in there. We are a discretionary category, and by all means, it is a choice, more than an SSD in a lot of ways. You look at what's happening in the macro of luxury right now. A lot of that's just being driven by the Middle East, and so a lot of those numbers that you're quoting are largely due to just the market and Dubai mainly kind of drying up, and of course discretionary spending. And it puts around the world, I imagine being a little lighter. Exactly right. Not so many duty-free pits. Exactly right. So if you kind of look through some of those like really pointed kind of components of the numbers, luxury is still a very excellent, strong category when you get it right. You bring that back to us in Sir Michael's DNA and the foundation that he laid for us. He believed that everybody deserved to have nice jewelry,

1:00to have access to an incredible shopping experience, right? He took stuff out of the good room and made it accessible to everybody. Making modern luxury accessible is exactly what we're focused on, and if we can get that right, we win. Gold prices, I mean, this through the roof. Does that squeeze margins? Are you able to pass some of that through? How does that hit? They move a lot. You're not wrong. Silver is right along their width, gold, unfortunately. But what I would say, this is a business that over time has always managed through that. This is not the first year that gold's been up. It's crazy up, though. I mean, it's double in the, you know, in the spice of $4,800 last I checked. But it was $5,500 a couple weeks ago. So like weirdly, it's down. But you're not wrong, right? Long term, it's gone up quite a bit. And the business has always managed somewhere that 60 to 62% gross margin rate along the way. And so I think what we see in that is that yes, gold is an increasing in value. People see that value. They're willing to pay for that value. And use, I mean, to some people can understand, are you sourcing it from suppliers, are you having it contract manufacturer? Are you making it yourself?

2:01Yeah. So we've made a couple changes to the brand over the years. And Daniel Bracken was a huge part of kind of leading a lot of this. And that we are now a fully private label brand. So we design and kind of make everything ourselves. Our headquarters is in Brisbane. We have a manufacturing facility in the basement of that building. Like here, a stack rank or manufacturing partners would be somewhere in the top five for ourselves. The remainder, we really do partner with the best of the best. And so there are certain categories where you actually want to make sure, for example, chains come from Italy. You want to make sure that you're getting your diamonds from India, because that's where most diamonds are cut and polished. There are other products that make a lot of sense to get from places like Turkey or places like Thailand. It just depends on the craftsmanship you're really trying to source. And then the design and acumen that we're trying to layer on top of it. But everything we do is designed by us. Throwing that all together then, you've got a bit of control over your supply. You're trying to make luxury affordable accessible. Have you really had to, I suppose, rethink some of the pricing, some of the promotional stuff, squeeze things down a little bit to meet this market?

3:02Yeah. And it's been changing as you can imagine quite rapidly, right? There's probably two big changes that we've made since I've joined again in the last seven months. The first is we no longer feel the need to have the same pricing strategy everywhere around the world. We operate in three markets. Australia is our biggest. Canada is our second biggest and our fastest growing. And then obviously here in New Zealand with about 15% of the brand. All of those markets have different consumers. They have different contexts. They have different tax structures. They have different relationships with jewelry. So we are allowing ourselves to provide similar product that it differentiated price points when it makes sense. It's really important that the way that our promotions show up for Kiwis is different than the way it shows up for Aussies. We have a different footprint here in New Zealand. We have one store for every 100,000 Kiwis. We're in Canada that grows to one and every 500,000 Canadians. Is that an opportunity to look at that footprint here and go, do we need that? I'm really happy with the footprint we have. I think if it wasn't a profitable footprint, I'd feel differently, but it's a profitable footprint. There's probably

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