Samsonite International SA (1910), the largest branded-luggage maker, is pulling its Tokyo Chic line to replace handles after reports they contained carcinogens.
The Mansfield, Massachusetts-based company said in a statement it has “absolute conviction” the Tokyo Chic line is safe to use and the recall is aimed at ensuring consumer confidence. The cost of the replacements will amount to no more than $500,000, Ramesh Tainwala, the company’s president for Asia Pacific and Middle East, said yesterday in Hong Kong.
Samsonite shares plunged 16 percent in the city on June 15 after Choice Magazine, a monthly publication of the Hong Kong Consumer Council, reported that handles of some Samsonite luggage contained materials which could cause cancer. Samsonite, Prada SpA (1913) and Burberry Group Plc are increasingly counting on China for growth, as consumers in the world’s most populous nation become more affluent.
“The impact on sales is very small,” said Alfred Ying, a Hong Kong-based analyst at Piper Jaffray Asia Securities Ltd., who has an “overweight” rating on the stock. “It’s a positive and speedy action that they’ve taken. Consumers will be more comfortable in using their products in the future.”
Samsonite fell 0.2 percent to HK$12.96 at 9:48 a.m. Hong Kong time. The stock is down 11 percent from its initial public offering price last June.
Hong Kong is a popular shopping location for Chinese tourists, who would have to pay luxury goods taxes in the mainland. Retailers recorded an average 17 percent sales gain for jewelry, watches and valuable gifts in the first three months of the year in the city, compared with a year earlier.
The Consumer Council report is “irresponsible” and based on “isolated statistics,” Tainwala said.
The magazine, which mentioned Samsonite’s Tokyo Chic, Cubelite and Westlake lines, had said the immediate danger was minimal. Samsonite said on June 18 it was recalling the Tokyo Chic line from Hong Kong, after stating June 15 that all three brands were safe.
“Whether they decide to pull their products or not is their decision,” Christina Wong, a spokeswoman for the council, said today. “The most important thing about our test report is to educate the public.”
The council’s tests were organized by global consortium International Consumer Research and Testing and were according to “objective standards,” she said.
Samsonite sent random samples of the products to laboratories in Germany and Hong Kong to assess the levels of polycyclic aromatic hydrocarbons in the handles, it said. The test results found levels that were “significantly lower” than those reported by the consumer council, Samsonite said.
Customers who have bought the luggage range can return the product to any Samsonite store to have the side-carrying handle replaced, it said.
Tainwala said in January he expects China to overtake the U.S. as the company’s largest market in the next three to five years. China contributed about 10 percent to the group’s total revenue in 2011, while the U.S. accounted for 25 percent.
Sales of discretionary goods in China will grow by a compounded annual rate of 13.4 percent between 2010 and 2020, as shoppers in the world’s second-largest economy become richer, McKinsey & Co. said in a report in March.
China’s urban disposable income rose 14 percent to about 21,810 yuan ($3,400) in 2011.
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