Samsonite sees third-quarter sales, operating profit fall
Luggage company Samsonite’s net sales fell by 0.7 per cent in the third quarter, as the US-China tariff war put pressure on the US market and increased distribution expenses affected the company’s gross profit margin.
In its latest financial report, Samsonite said net sales in the three months to September 30 decreased to US$921.5 million while operating profit declined by 13.4 per cent to US$104.9 million.
Its performance in the nine months to September 30 also declined, net sales down by 1.2 per cent to US$2.677 billion and operating profit down 28 per cent to US$229 million.
CEO Kyle Gendreau says the decline was partly related to the increased expenses from expanding the brick-and-mortar retail network which took place in 2017 and the first half of last year, particularly in Europe.
While its overall financial performance was weak, the company was pleased with its performance in Asia with net sales in the region increasing 4 per cent to US$333.1 million during the third quarter. The increase was driven by robust constant-currency net-sales gains in China, Japan and India.
Looking ahead, the company expects “continued uncertainty in the global outlook for the remainder of this year and into 2020 due to a number of geopolitical and macroeconomic factors, including the ongoing trade negotiations between the US and China, Brexit, economic growth slowing in parts of Europe and the recent events in Hong Kong”.
Though it has expressed uncertainty in its outlook, the company is determined to continue to invest in the business to position itself for long-term growth and improved profitability while maintaining its focus on controlling costs, managing working capital, generating cash and further strengthening the balance sheet.
The company plans to improve its financial performance by increasing its brick-and-mortar retail profitability, maintaining tight control on non-advertising administration expenses, and enhancing working capital efficiency.