Room to raise the ceiling: management says its own prices, rates, or terms sit below what the market would currently bea
The model's full reasoning — Q4 2024 call → NOWe need to determine if management conveys that the company is currently charging less than what the market would bear, and that they are actively closing that gap while customers stay. Look for management's own words about pricing being below value, and real movement to raise prices. In the transcript, management discusses gross margin expansion, AUR improvements, and higher AURs for owned brands. For example, Morris Goldfarb says: "Our owned brands are generally higher AURs than our licensed brands. Our margins are significantly better today with DKNY. We're buying better. We're positioning it differently. And our new launch of Donna Karan is significantly higher. Our AURs are significantly higher than Calvin Klein and Tommy Hilfiger." This indicates they are getting higher prices for their own brands, but is that a gap between price and value? They are launching new brands with higher AURs, but they are not explicitly saying they were undercharging and now raising prices. They mention "AUR improvements" in the context of gross margin expansion, but that could be due to mix shift, not necessarily raising prices on existing products. Also, they talk about "disciplined inventory management, moderation in freight, a greater mix of our own brands and AUR improvements" as drivers of gross margin expansion. That suggests they are improving pricing, but is it a discovered gap? They also mention "we're also selling to the brands global distribution network" for Nautica, etc. But no explicit statement that they are charging below market and now closing that gap. The question asks: "Does management convey that the company is currently charging LESS for what it sells than the market would presently bear — that its own prices, rates, fees, or terms sit meaningfully below the value customers are getting or below what the current market would support — AND that the company has already begun, or is now actively beginning, to close that gap while customers stay?" Look for phrases like "undercharging", "below market", "raising prices", "pricing power" with specific actions. Management does mention "AUR improvements" and "higher AURs" for new brands, but they don't explicitly say they were leaving money on the table. They also mention "we're investing in talent" etc.
| Ticker | Company | Call | Date | Call grade |
|---|---|---|---|---|
| MEC | Mayville Engineering Company, Inc. | Q3 2022 | 2022-11-05 | B+ |
| CAG | Conagra Brands, Inc. | Q2 2017 | 2016-12-22 | C+ |
| SOHO | Sotherly Hotels Inc. | Q3 2016 | 2016-11-08 | D |
| RCL | Royal Caribbean Cruises Ltd. | Q1 2016 | 2016-04-29 | C+ |
| HPP | Hudson Pacific Properties, Inc. | Q4 2015 | 2016-02-25 | C |
HPP · Q4 2015 → YESThe question is: Does management convey that the company is currently charging LESS for what it sells than the market would presently bear — that its own prices, rates, fees, or terms sit meaningfully...YES The transcript shows management explicitly describing a gap between its current charges and what the market now supports, then confirming that the company is already closing it through mark-to-market resets and higher new/renewal rents. Victor Coleman states that the company has “rolled out 80% plus mark to market” on recent leases 2.5 years old, and that cash rent spreads on 1.6 million square feet executed since the acquisition were “north of 30%” with “20%, 25% mark-to-market for 2016 and 2017.
MEC · Q3 2022 → YESThe question is: Does management convey that the company is currently charging LESS for what it sells than the market would presently bear — that its own prices sit meaningfully below the value custom...YES Management explicitly states that they have taken pricing actions in 2022 and have "more room for margin expansion through continued value pricing even beyond the pricing actions taken during 2022." This conveys that their current prices sit below what the market would support, and they are actively beginning to close that gap with further value pricing.
SOHO · Q3 2016 → YESThe question is: Does management convey that the company is currently charging LESS for what it sells than the market would presently bear — that its own prices, rates, fees, or terms sit meaningfully...YES The transcript shows management explicitly identifying a rate gap at the Laurel hotel (and similar situations at other properties) where current charges sit below the competitive set/market, while describing active steps already underway to close that gap through continued ramp-up and occupancy/rate improvements.