On a true Made In Japan company Part 2
JEH's unique opportunity: Luxury x Aging Demographic x Tourism
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Welcome back to our discussion on Japan Eyewear Holdings
In the last part, we discussed their store opening strategy. Today we’re discussing another crucial pillar to the thesis - which is their pricing. I think they can continue to increase this over time.
Pricing as a strategy and differentiator
The price range at which JEH’s eyewear is sold is high. Translated into US dollars Kaneko and Four Nines’ Average selling price (ASP) is $450 and $500 respectively. (on supposedly weak FX). These fall into a similar range of other known luxury eyewear brands like Oliver Peoples or Moscot.
As you can see below, the firm has been deliberately increasing its pricing consistently. The flatness in Four Nines pricing before 2021 can be explained by the fact that this was pre-acquisition. One of the main things they started doing immediately after it acquired the brand was to raise prices.
Management expects the pricing of Four Nines to be structurally higher, given that this brand focuses on an older demographic and the cost of lenses is higher. (the cost of frames is the same for both brands).
So realistically how much more room is there to increase prices?