UK Price Rises

Your understanding of hedges is incorrect. It is entirely possible to institute a long-term hedging strategy, although in some cases it may involve the use of short-term products. Investment funds, dealing in the equivalents of billions of dollars in "foreign" currency do this regularly. For many investment funds (or, if you prefer, mutual funds) hedging appears in their prospectus as part of a long-term investment strategy, opening that strategy to the scrutiny of securities regulators. This is not Sonos, but this is long term hedging. It does exist and it's in use constantly by businesses and investors around the world. As I'm sure you know, hedging isn't always successful and positive results are not guaranteed. But that's dependent on circumstances and the skills of the hedger.

Lol. I agree that I don't understand hedging. I must have wasted the years I spent in the corporate treasury function of a global manufacturing company.

Or your company was only interested in short-term hedging. Apparently I've wasted years of writing about currency and hedging for some of the world's largest financial institutions. Btw, you mentioned above something about the premium being built into the cost structure. Successful hedging pays for itself; it should be reducing the "cost structure"--in other words, reducing or managing costs. Of course, whether a company wants to reduce costs and at the same time increase profit is up to them. That doesn't necessarily sit well with customers, which I think is what we're seeing in this discussion. (What is wrong with the quote function on this forum? It no longer works for me.)

This is simple. Sonos is entitled to price how it wishes, for whatever reasons. It's natural people don't like price hikes. They are entitled to the view that it is a mistake, or that it is justified - neither camp has anything like enough information to judge that, and I am totally agnostic. But Sonos is under no moral obligation to sell at a particular price, to limit price rises to a certain percentage, or sell at the same price in different markets (whatever "the same" means in a world of floating currencies and differing tax regimes). Nobody has to buy it. One poster described the increases as "exploitation", for goodness sake! Like Kumar, I've had enough of this nonsense. Say whatever you like in response, because I won't be reading it.

Of course the company has the right to price its products however it wishes. And customers have the right to complain about a company that prices however it wishes. There are two sides of the equation, the seller and the buyer. The last time I looked, these forums consisted mainly of buyers. Why wouldn't they complain here? I'm always amused by the commenters, and there a few of them here, who opine and then inform other participants not to bother replying because they won't be listening. In a phrase, "who cares?" This is a discussion forum, and people discuss.

Manufacturing businesses are not in the business of taking exposures/hedges for the long term for their business operations because that isn't their competency. For instance, try obtaining a hedge contract for USD/GBP for a five year term, that will convert proceeds of all Sonos sales in the UK for the next five years into USD at today's USD/GBP rate. There will be a huge hedging cost to be paid that may prove to be an unnecessary expense and one that the price for its products may also not support today. All that a manufacturing company like Sonos does is take hedges for the short term future/planning horizon, and use the relatively small premium on these hedges to freeze the cost/revenue structure over this term and keep going forward on this basis, periodically adjusting prices if necessary to reflect FX rate changes. And they will usually use natural offsetting hedges to the extent possible, so that the premium cost gets incurred only for the net differences over the planning horizon.

Manufacturing companies do more than this are using their treasury function as a profit centre; inevitably taking risks in a business they don't always understand, and the ones that know their limitations tend to not do this.

I am aware of many manufacturing corporations with tremendous hedging competency, both short term and long term. I'm certain you are, as well. In fact, I'm originally from a country where currency management strategies are paramount--Canada, where 80% of goods and services are exported to the US, and the US$/C$ exchange rate fluctuates considerably. Granted, many of those companies are larger than Sonos. Sonos is a private company, so unless you are an employee or former employee I can't fathom how you would be privy to their hedging competency or their hedging strategy.

In any event, I'm sure we've said more about hedging than most people want to hear. My contention is simply that attributing a price increase only to $/£ FX (or $/C$ FX) isn't credible for a company that manufactures outside of these currency zones and sells in many countries. Some kind of currency management surely must be in use, whether it's simple natural hedging, more complex hedging strategies or simply or managing to pass along currency risks to suppliers or contract manufacturers. If none of those exist, Sonos risks pricing itself out of some markets. I'll be interested to see what happens with pricing when medium-term currency moves are in Sonos's favour.
As another example, and as a photography enthusiast, I note that the prices of camera equipment sold by major manufacturers such as Canon don't fluctuate nearly as much in any country I spend time in, including Canada and Brasil. Both those countries have experienced tremendous currency fluctuations over the past few years relative to the yen and US$, yet prices haven't wavered much. That isn't to say they don't differ from, for example, the US, because they do. In Brazil, photo gear is horribly expensive for many complex reasons. But the professional Canon photo printer I purchased in Brasil two years ago is still sold for the same price in local currency. Canon didn't jack up the price, and obviously didn't blame currencies because it didn't do anything. The printer was manufactured in Thailand and imported into Brasil from Canon Mexico by Canon Brasil.

I am certainly not privy to their strategy. But I know enough of hedging to not say: if they knew how to implement a good hedging strategy, they would not need to do this price increase for the ascribed reasons.

It would be like me, a non engineer, saying - if Sonos are any good at engineering, they should be able to easily make an outdoor speaker, or a computer speaker, or a wireless system that does not depend on the external WiFi/interference environment, and so on, down the usual wish list.

Before we now get into arguing on this matter, I am signing off from this thread.

Well, just seen the prices today. That's me out of buying any new sonos speakers unless they have huge Christmas sales. 😞

Just pleased I already have the full 5.1 set up in one room