Samsonite Expects European Travel Market to ‘Go Back Slightly’
Samsonite International SA (1910), the world’s largest maker of branded luggage, expects the European travel market to retreat in the first six months of the year and then begin to recover.
“Maybe in the first half it will go back slightly but I think in the second half of this year and next year, things will get better,” Chairman Tim Parker said in an interview in London yesterday. “I’m not pessimistic about Europe and I think we’re probably over the worst in terms of the credit crunch.”
Samsonite will consider “more moderated” price increases in 2012 after boosting charges by 4 percent to 5 percent last year to help cover higher labor and commodity costs, Parker said. Spain and Italy have “flat” sales and are the biggest challenges in Europe for the Massachusetts-based maker of suitcases, backpacks and duffle bags, he said.
“Germany, the Netherlands, Scandinavia are actually doing really quite well,” the 56-year-old Oxford-educated executive said. “France and the U.K. are flat-lining and Italy and Spain are slightly more challenged,” he said.
Asia (1910) overtook Europe as Samsonite’s largest market “by a slither” in the first half of last year, and the region has the highest revenue growth rate at 40 percent to 50 percent, Parker said.
The retailer, which sells the B-Lite suitcase for 159 euros ($213), listed on the Hong Kong exchange last year, and the shares have advanced 7.5 percent since then to HK$13.98, though they remain below the initial public offering price of HK$14.50.
Samsonite opened 250 points of sale in Asia in the first half with majority concession spaces inside malls and shopping centers, along with standalone outlets and franchise dealers. Higher prices, innovations in reducing weight such as Cosmolite plastic laminate bags, changes to airline luggage rules, and increasing tourism in Asia are driving growth, said Parker, who is also chief executive officer of the company.
Samsonite remains interested in acquisitions and isn’t in discussions with anyone, including Tumi Holdings Inc., Parker said. A Samsonite executive described the South Plainfield, New Jersey-based bagmaker as a “natural fit” last month.
“We wouldn’t aim to raise any new equity, but the company has significant debt capacity” for purchases, Parker said. The retailer, with about 50 factories in Asia and sales to more than 100 countries is a “formidable distribution machine” he said. The company would be interested in brands that can piggyback on its existing distribution, Parker added.
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