Samsonite does well when tourism industry is doing good

Excluding foreign currency effects, net sales for Samsonite on a year-on-year were up 16.5 percent to US$983.6 million for the first half of the year.

Samsonite does well when tourism industry is doing good

Excluding foreign currency effects, net sales for Samsonite on a year-on-year were up 16.5 percent to US$983.6 million for the first half of the year. American Tourister, the firm’s entry-level brand drove a significant increase in sales growth, surging 25.7 percent while Samsonite delivered 5.5 percent.

Growth in global tourism and strong demand for midrange luggage products saw the world’s largest travel luggage company, Samsonite International, record a 16.9 percent increase in profit year-on-year for the first half of the year.

Chief executive Tim Parker said he expected there to be future significant growth in midrange products. International tourist arrivals grew by 4.3 percent over the same period and growth between 3 to 4 percent is expected for the full year, according to the World Tourism Organization.

The world’s largest travel luggage company, Samsonite International, said it would raise prices in India and Japan to counteract the effects of the weak rupee and yen.

The firm raised retail prices by an average of 10 percent and 7 percent respectively in India and Japan at the start of the year and would repeat that in September, Asia Pacific and Middle East president Ramesh Tainwala said.

The Indian rupee dropped by nearly 4 percent to a new low of 68.7 to the US dollar amid fears of a scaling back of the US fiscal stimulus package while measures from the Abe administration in Japan have caused the yen to also plummet. In May, the yen was at a four year low.

Samsonite recorded a 16. 9 percent increase in profit year-on-year for the first half. Profit after adjusting for a one-off deferred tax credit last year was US$94.7 million, beating a consensus forecast of HK$90.33 million compiled by Bloomberg.

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Excluding foreign currency effects, net sales year-on-year were up 16.5 percent to US$983.6 million for the first half of the year. American Tourister, the firm’s entry-level brand drove a significant percent of sales growth, surging 25.7 percent while Samsonite delivered 5.5 percent. Chief executive Tim Parker said he expected there to be future significant growth in midrange products.

North America was one of the top performing markets, achieving 30.2 percent growth in net sales while the mainland market, which makes up 9.5 percent of their business, grew 8.1 percent.

“As a brand, Samsonite continues to do well but we believe that it would be difficult for Samsonite to positively surprise the market from here as its US business will likely slow down next year, this year is being supported by High Sierra and Hartmann,” a research report from Nomura said.

Samsonite said the firm is actively looking in the US, Europe and Asia for acquisition opportunities and is interested in expanding further outside of luggage products.

“We have a strong balance sheet, a capacity [to do a deal] up to probably a billion dollars. We think there are some fantastic opportunities out there … We’re still not in the handbag market. We have a small share of outdoor segment, not in the lower-end of the luggage market, still a small player in the business category and have a lot to go in the casual products category,” Parker said.

However, the firm ruled out buying luxury companies. A year ago, Samsonite acquired luxury luggage company Hartmann for US$34.0 million and outdoor lifestyle brand High Sierra for US$108.0 million.

Shares of Samsonite yesterday moved up to HK$19.48 from HK$19.28. The benchmark Hang Seng Index fell 1.6 percent.

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