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Samsonite Sees Slower 2012 Asia Growth, Europe Recovering

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Samsonite Expects 2012 Asia Sales to Grow Slower
Samsonite International S.A. suitcases are displayed in a Samsonite retail store in Hong Kong, China. Photographer: Jerome Favre/Bloomberg

March 28 (Bloomberg) -- Samsonite International SA’s sales in Asia, its largest market, will increase 15 percent to 20 percent this year, slowing from 43 percent growth in 2011, Chairman and Chief Executive Officer Tim Parker said.

Sales in Europe and the U.S. at the world’s largest branded-luggage maker will see “upper single-digit” growth this year as the European economies show signs of recovery, Parker said in an interview in Hong Kong today.

Economic growth in China and India, Samsonite’s two largest markets in Asia, slowed last year and this may continue in 2012. Chinese Premier Wen Jiabao set a 2012 economic growth target of 7.5 percent on March 5, lower than an 8 percent goal in place since 2005. India’s government predicts growth may rise 6.9 percent in the year ending March 31, compared with 8.4 percent in the previous one. Still, Parker said Asia demand will become a bigger part of the company’s business in the coming years.

“There is a huge demand for our products” because of the increasing number of travelers in Asia, Parker said. “China is growing really fast,” he said. “People are getting disposal income. They want to travel.”

Expenditure Budget

The luggage maker has budgeted $43 million as capital expenditure this year which will be used mainly to expand its sales network in Asia, the company said in a statement today.

Samsonite plans to add 200 new stores in China this year, Ramesh Tainwala, president for Asia, said at a press conference today.

Shares of Samsonite have gained 15 percent in Hong Kong this year, compared with a 13 percent advance in the benchmark Hang Seng Index. The stock dropped 1.1 percent to close at HK$13.96. This compares with its initial public offer price of HK$14.50 a share in June when Samsonite raised about HK$9.73 billion ($1.25 billion).

The maker of backpacks, luggage and travel gear today reported 2011 net income of $86.75 million, beating the average estimate of $76.6 million from three analysts’ estimates compiled by Bloomberg and ahead of the $64.2 million forecast in the company’s June prospectus.

Asia accounted for 37 percent of group sales of $1.57 billion last year, Samsonite said in a statement to Hong Kong’s stock exchange.

Spain and Italy have “flat” sales and are the biggest challenges in Europe for the Massachusetts-based company, Parker said last month. Most economies in Europe have begun to show evidence of recovery in recent months, he said today.

“What’s encouraging from our perspective is that people in the States are traveling more,” Parker said. While “if you look at some of the European economies people are under a lot of pressure, but they don’t want to give up their holidays,” he said.

U.S. sales in the first two months of this year grew more than 20 percent from a year earlier, Parker said today.

Samsonite may make one to two acquisitions this year, Parker said, without disclosing further details.

To contact the reporter on this story: Vinicy Chan in Hong Kong at vchan91@bloomberg.net

To contact the editor responsible for this story: Stephanie Wong at swong139@bloomberg.net

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