Samsonite profits up in 2015 but outlook ‘uncertain’

HONG KONG, China – Luggage giant Samsonite on Thursday, March 17, warned its outlook for this year was “uncertain” owing to the growth slowdown in key market China and a stronger US dollar.

The firm said in a filing with the Hong Kong Stock Exchange that despite a tough trading year, it saw net profit rise 6.1% to $197.6 million last year thanks to record revenues of $2.43 billion.

“Our business has emerged stronger from 2015… despite various headwinds around the globe,” chairman Timothy Charles Parker said in the statement.

However, chief executive Ramesh Dungarmal Tainwala said the outlook for 2016 “remains uncertain, with challenging trading conditions expected in a number of our key markets including China, and the negative currency translation impacts from the strong US dollar expected to continue affecting our business.”

The world’s second-largest economy expanded 6.9% in 2015, the worst performance in a quarter century and a far cry from the years of double-digit increases. The country’s luxury market also took a hit from a years-long corruption crackdown.

“It is undoubtedly the case that the days of 20-30% growth in China are over,” Parker said.

Shares in the company ended the morning session 1.54% up at HK$26.30 Thursday.

The warning comes after Samsonite earlier this month said it would buy US luxury bag maker Tumi in a deal worth $1.8 billion, which analysts said would provide a foothold in the still-lucrative high-end market in China.

The move follows the purchase last year of airport retailer Rolling Luggage and Italian accessories seller Chic Accent.

Parker said the Tumi deal is expected to close in the second half of the year subject to shareholder and regulatory approval. 

“Tumi is a perfect complement for our business… We believe we are buying a strong, profitable, and well-run business, with considerable flair and success behind it in the American market,” he said. 

Samsonite raised $1.25 billion in an initial public offering in Hong Kong in June 2011, one of several Western brands – including Prada and Esprit – seeking to use the city to boost their presence in fast-growing Asian markets, particularly China. – Rappler.com