Today’s breakdown has been at the top of our to-do list since the show started. There are few brands as strong as this one and the way the Dumas family has nurtured it over six generations is remarkable. We are, of course, talking about one of the ultimate status symbols, Hermès. What began as a specialty saddles business in the mid 1850s has become famous for iconic handbags and other luxury items. Last year, the business earned $9 billion at 70% gross margins. It does things differently and to explore the details behind its difference, I’m joined by long-time shareholder, Mark Urquhart. Mark is a partner at Baillie Gifford and head of their Long Term Global Growth team, which he co-founded in 2003. Hermès was in the original portfolio when it launched in 2004 and has been held since then. Please enjoy this breakdown of Hermès.   For the full show notes, transcript, and links to the best content to learn more, check out the episode page here.   -----   This episode is brought to you by Tegus. Tegus is the new digital hub for market intelligence. The Tegus platform empowers Investors and Corporate Development teams to invest smarter by pairing best-in-class technology with the highest quality user-generated content and data. Find out why a majority of the top firms are using Tegus on a daily basis. If you're ready to go deeper on any company and you appreciate the value of primary research, head to tegus.co/breakdowns for a free trial.   -----   Business Breakdowns is a property of Colossus, LLC. For more episodes of Business Breakdowns, visit joincolossus.com/episodes.   Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here.   Follow us on Twitter: @JoinColossus | @patrick_oshag | @jspujji | @zbfuss | @ReustleMatt   Show Notes [00:02:29] - [First question] - The iconic Birkin and Kelly bags explained [00:04:41] - New price and resale price for a Hermès bag [00:06:13] - Production and distribution dynamics of Hermès bags [00:08:11] - Overview of the company’s scale and structure [00:09:52] - The basic margin structure and history of Hermès [00:12:10] - Defensibility of investing in a luxury brand like Hermès [00:15:48] - Market size and potential for future growth [00:21:20] - The power of Hermès’ long heritage history [00:26:37] - His definition of luxury and the role of luxury products in culture [00:30:49] - The Hermès manufacturing model and their focus on craftsmanship [00:35:28] - Strategies that Hermès has chosen to avoid [00:38:51] - The importance of their six-generation family stewardship [00:42:42] - How the family has maintained the business for so long [00:45:41] - Overview of retail sales and their distribution model [00:48:28] - Learnings from Hermès’ marketing strategy [00:52:08] - How he would set up a brand if he needed it to compete with Hermès [00:54:28] - Companies that come close to Hermès from an investment perspective [00:56:20] - The complexity of Hermès’ valuation and growth potential [01:00:59] - Why Hermès maintains a conservative capital allocation model [01:03:07] - The importance of their consistently simple products and business model