Samsonite’s interim profit falls 12.7 per cent, as online shopping crimps demand for luggage
Company, facing ‘the most challenging market conditions since 2008’, is shifting to online sales from conventional retail stores
Samsonite International SA, the world’s largest luggage maker, said net profit fell 12.7 per cent in the first half, as a weak global economy discouraged travelling and spending, while more customers opted to shop online, eschewing the need for carriage bags and trunks.
Interim profit fell to US$82.4 million, or 5.8 US cents per share, Samsonite said. Net sales rose 1.1 per cent to US$1.21 billion, the company said in a statement.
“In the short term we are facing the most challenging conditions in the market since the global credit crisis in 2008,” Samsonite chairman Timothy Parker said in a statement to the Hong Kong stock exchange. “Consumers are spending, but they are spending more carefully, and looking for value. And one place that value is available is online.”
Samsonite’s biggest market is in Asia, contributing 38.9 per cent to its global sales, while North America made up 33.4 per cent, Europe added 22.2 per cent and Latin America added 5.2 per cent.
A strong US dollar eroded Samsonite’s Asia and Europe earnings in dollar terms, the company said. A worldwide trend to buy everything online further dampened demand for luggage, Parker said.
“In many of our key markets, our traditional channels of distribution have begun a painful process of adjustment to the shift in business online, and the implications for scale and type of retail estate,” Parker said.
The company is shifting its sales to online stores, from traditional retail outlets, he said.
Direct-to-consumer e-commerce sales in Asia increased by 35.5 per cent in the first half, while sales through its retail shops fell 5.3 per cent in the same period, the company said.
Samsonite last year announced a US$1.8 billion takeover of Tumi, which makes luxury luggage. The acquisition was concluded on August 1, incurring a one-off cost of US$6.9 million for due diligence and professional fees, Samsonite said.
“Tumi’s strength in business and casual bags will greatly enhance our position in these categories, and by the same token we believe there is a significant opportunity to develop Tumi’s travel goods business,” Parker said. “Although the brand has strong recognition in the financial community across the world, it is under-represented outside the American market, and the established global distribution of our business can be a powerful platform for future development.”
Samsonite’s shares, which declined 1.4 per cent in Hong Kong this year, fell 3.2 per cent on Monday to HK$23, before its interim results were announced.