Samsonite International reported robust sales in China helped fuel a 16.6 percent increase in currency-neutral sales in the six months ended June 30, indicating Chinese consumers continued to spend on travel despite a collapse of domestic stock prices and slowing exports.
The Hong Kong-based maker of luggage and packs reported that sales in currency neutral (c-n) terms, rose 17.2 percent to $471.4 million in Asia, 17.3 percent to $402.7 million in North America, 17.4 percent to $255.0 million in Asia, and 7.3 percent to $62.9 million in Latin America. In China, net sales increase by 29.8 percent year-on-year, driven by Samsonite and Samsonite Red , a new sub-brand created for Asian consumers and double-digit growth in both e-commerce and wholesale sales.
Organic sales rose 14.7 percent in Asia, 15.5 percent in Europe, 3.7 percent in North America andL7.3 percent in Latin America, excluding Brazil.
Total sales grew reached $1.20 billion, up 8.2 percent, or 16.6 percent after excluding the negative $92.2 million impact from currency translation. Excluding three brands acquired in 2014 (Lipault, Speck and Gregory), gross margin, fell 130 basis points to 52.0 percent, and EBITDA and net profit margins slipped 70 basis points each to 16.4 and 9.2 percent respectively from the first half of 2014.
High Sierra up 5.3 percent c-n, Gregory flat
Samsonite International reported its Casual Product sales grew 21.7 percent in currency-neutral terms to $155.9 million in the first half ended June 30, primarily as a result of the acquisition of Gregory a year ago, the extension of the High Sierra brand into Asia and Europe and growth of the Samsonite Red sub-brand in Asia. Excluding Gregory, organic sales grew 2.3 percent.
Sales of its High Sierra brand reached $54.4 million, up 3.0 percent (5.3 c-n) from the six months ended June 30. High Sierra's sales in the Asia region grew 64.4 percent to $7.1 million from the previous year.
Sales of Gregory backpacks and other gear, reached $18.0 million, ($19.3 million c-n), with $9.0 million coming from Asia and $7.7 million coming from North America. The topline number represents flat growth with the first half of 2014, according to financial results published by Black Diamond Inc., which sold Gregory to Samsonite July 23, 2014 for $84.1 million, or 2.3 times projected 2014 sales.
Sales at the company’s Travel Products segment, which consists of conventional luggage, grew 9.5 percent c-n as net sales of the flagship Samsonite luggage brand increased by 7.5 percent year-on-year to $736.3 million, accounting for 61.5 percent of the Group’s total US dollar Reported net sales. That compared to 67.3 percent for the same period in 2014. The American Tourister brand recorded net sales of $263.8 million, an increase of 18.4 percent c-n from the same period in 2015, with the growth largely driven by Europe and Asia.
Sales of Business Product reached $130.1 million, up 44.4 percent c-n due primarily to sales of tablet and laptop cases, while Accessories sales reached $76.9, up 52.7 percent c-n driven by the acquisition of Speck mobile phone and other cases and strong organic growth outside North America.
Acquisitions hunt continues
CEO Ramesh Tainwala said currency-neutral growth of 5.3 percent at High Sierra and 9.7 percent at the Milwaukee-based Hartmann luxury luggage brand show Samsonite’s investments in those 2012 acquisitions is yielding returns.
“The brands we have acquired are beginning to gain traction as we fine tune their product, marketing and channel strategies to expand and compete outside their home markets,” said Tainwala.
Despite slowing growth in emerging markets, Samsonite said it “aims to deliver top-line growth, maintain gross margins, increase Adjusted EBITDA margins” in the second half as it continues to integrate Speck, Gregory and Lipault. It continues to evaluate acquisition opportunities.
“We also see good potential in the non-travel product categories, especially the large but highly fragmented backpack and casual bag segment where our market share is currently very small,” said Tainwala. “We believe our strategy of deploying multiple brands in this category will provide us with the building blocks for sustained long-term growth.”
