Jeff Berry

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On December 13, 2015, Jeff Berry commented on Dufry: Consolidating Profitably in Travel Retail :

Thanks for the input. Re: your questions, I would note the following:

– Dufry’s revenue is 89% airports / 10% other (cruise ships, rail stations, downtown shops). Dufry is adding off-airport space in markets where it wants to compete but airport operators demand economics that are too onerous for a financially disciplined operator like Dufry (i.e. in Asia).

– Dufry’s focus is largely on growing the beauty category (perfumes and cosmetics). They could mix into other luxury goods like leather, but it’s somewhat difficult because i) major luxury brands have opened monobrand stores in airports (though they are loss-making), ii) major brands are right-sizing distribution and getting out of the wholesale channel, and iii) the inventory turns and ROI is much better on a small bottle but expensive bottle of perfume vs. an expensive handbag

Peter, thank you for sharing. My key issues with the business model are the following: i) no algorithm can ever replace the skill of certain investors, to whom financial advisors play a key role in allocating capital; ii) there are few barriers to entry in creating a portfolio of low cost ETFs (said differently, wealth managers like Schwab and Fidelity are starting competing services already); and iii) roboadvisors only work for individuals without complex investments. I have no doubt roboadvisors can win AUM, but I do not see them taking significant share of fund flows from asset managers.

On December 12, 2015, Jeff Berry commented on Greenhill: Alignment Through Simplicity :

I would echo Leigha’s question – if Greenhill is recruiting industry experts from larger investment banks, what happens to the capable mid-level employees? How do they stay motivated, aside from compensation (which is definitely not everything)? In addition, I wonder how Greenhill can be competitive to win mandates when other competitors that have equally talented bankers can lead with their balance sheets. Further, I wonder how the operating model holds up given the importance of the restructuring practice – when there are periods of fewer bankruptcies, how is are resources utilized to drive revenue in other parts of the business?

On December 12, 2015, Jeff Berry commented on PillPack: the new kid on the block in the world of pharmacy :

Interesting post, Sojung. I would agree that the pharmacy value chain (from retail pharmacies to wholesalers to PBMs) is a very tough place to compete – it is for this reason that so much industry consolidation has occurred over the last few years. Rising drug costs and the pendulum shift from generics to specialty pharmaceuticals (growing at double digit CAGRs) has prompted the largest pharmaceutical buyers to consolidate to gain a scale advantage in sourcing drugs. Accordingly, I wonder if PillPack can remain competitive. The potential game-changer could be whether there is a regulatory change that allows for greater original use dispensing, which is more common in Europe.