Asian sales hold up for Samsonite International
A soft North American market saw global sales for luggage maker and retailer Samsonite International slip 1.8 per cent in the December year – but the company is expecting a tough first half with the advent of coronavirus.
CEO Kyle Gendreau said the global health emergency has caused travel disruptions worldwide.
“While the extent and duration of the COVID-19 outbreak remain uncertain, we are reassured by actions taken by governments and health authorities around the world. Nonetheless, the outbreak will have a negative impact on our performance in the first half of 2020.”
But he said the company is well placed to withstand the upheaval, with more than US$1.2 billion in liquidity and “a strong record of managing through past travel disruptions”.
Last year’s sales reached US$3.64 billion, with all areas outside North America – where sales fell 8 per cent – achieving growth. Sales in Asia rose 1.5 per cent, in Europe by 3.2 per cent and in Latin America by 2.8 per cent.
“These encouraging results … were achieved notwithstanding headwinds in four key markets, including the US, which was affected by increased tariffs on products sourced from China, and lower foreign tourist traffic, the Hong Kong domestic market, South Korea and Chile.”
In Asia, the group’s business was impacted by a planned reduction in B2B sales during the first half of the year in China, challenging market conditions in the Hong Kong domestic market and weak consumer sentiment in South Korea. Excluding these impacts, the Group’s net sales for the Asia region increased by 6.8 per cent, year-on-year.
Samsonite International’s adjusted pre-tax earnings fell by 16.9 per cent, or $100.1 million, to $492.2 million, primarily due to the effect of lower net sales and a decrease in gross profit margin, which was in part due to the incremental tariffs imposed by the US on products sourced from China.
Gendreau says the company made steady progress in repositioning Samsonite for sustained growth and improved profitability last year, while navigating sales and margin pressures in some of its key markets.
“We are pleased with the improvements we achieved in controlling costs, managing working capital, generating cash flow and deleveraging our balance sheet. These improvements, along with our dedicated teams, strong brands, global scale and diversified sourcing base and supply chain strengthen Samsonite’s resilience in the face of challenging headwinds and provide us with the capacity to continue investing in the business to deliver sustainable growth and long-term shareholder value,” he said.