Samsonite China Acclimatization Net Profit Fell 29% Revenue Net Profit Double Down Debt Rate Climbed To 65%

After a year of short selling block, Samsonite, the world's 100 year old luggage giant (01910.HK), has not yet come out of the shadows.

Recently, Samsonite released the three quarter operating performance data show that in the first three quarters, the company achieved a net sales of $2 billion 677 million, down 4.2% compared to the same period last year, and the share holders should account for 102 million US dollars, down 28.6% compared to the same period last year. Meanwhile, Samsonite's asset liability ratio increased 2.34 percentage points to 65.22% from 62.88% in the same period last year.

The Yangtze daily news reporter found that Samsonite, founded in 1910, is the largest tourist luggage company in the world, with a history of more than 100 years. In 2011, Samsonite landed at the Hong Kong stock exchange. It also opened a merger and acquisition tour. The brand revenue package of High Sierra, Hartmann, Lipault, Speck, Gregory and Tumi was set up.

In addition, as one of Samsonite's main markets, sales growth has also slowed down. Data show that from 2011 to 2018, the net sales of Samsonite in the Chinese market increased by 57.4%, 20.4%, 5.3%, 18.7%, 13%, -0.4%, 7.2% and 6.9%, respectively.

In response to the company's performance and the development of the Chinese market, the Changjiang Daily reporter sent a letter to Samsonite, which was unanswered as of press release.

　　 Net profit fell nearly 30%

Recently, Samsonite announced that in the first three quarters, the company achieved a net sales of US $2 billion 677 million, down 4.2% compared to the same period last year, and the share holders should account for 102 million US dollars, down 28.6% from the same period last year. It is the three quarterly report of the first time that Samsonite has seen a double drop in revenue and net profit after landing in the Hong Kong stock market.

Judging from the announcement, even though Samsonite strictly controls costs, the distribution, marketing and general and administrative expenses have been reduced. However, the operating profit in the first three quarters still dropped by 29.4% to 229 million US dollars, and the profit in the period dropped by 26.4% to 116 million US dollars.

In the third quarter, the net sales of the company and the profit attributable to equity holders fell by 2.5% and 29.6% respectively. In terms of brand names, Samsonite, Tumi, Speck and many other brands included in other categories have declined to varying degrees. Among them, Samsonite, Tumi, Speck and others fell by 1.5%, 0.2%, 14.1% and 20%, respectively.

Meanwhile, during the reporting period, sales of Samsonite from major regions such as North America, Europe and Latin America decreased by 7.6%, 1.2% and 5.1% respectively. Among them, North America, as Samsonite's fortune, is also Samsonite's largest revenue area. The decline in net sales was mainly determined by the time and result of Sino US trade negotiations, and the tariff imposed on products from China in September 2018 and June 2019. Meanwhile, the decline of Chinese tourist flow in the US tourism destination market and other factors affected.

In the latest research report, Lyon said Samsonite's performance in the third quarter was weak, and sales were dragged down by South Korea and Hongkong business, which fell more than expected. Lyon believes that its fourth quarter is still full of challenges, accounting for about 40% to 45% decline in the last quarter of the Hongkong region, which accounts for about 5% of the company's sales.

Meanwhile, the Yangtze daily news reporter noted that since 2018, Samsonite's performance has declined significantly. Its net sales in 2018 and the growth rate of profit attributable to equity holders are 8.77% and -29.17% respectively, while in 2017, the sales net share of the group and the percentage of profit attributable to equity holders should be as high as 24.21% and 30.7% respectively.

To a certain extent, it is affected by the short selling block. In May 2018, the Blue Orca Capital issued a short selling report for Samsonite, which listed the "six counts" of Samsonite's unreasonable valuation, the inflated profits of the purchase price, and the fraud of CEO education. On that day, Samsonite's share price plunged nearly 10% and the emergency suspension was suspended.

Subsequently, although Samsonite issued a Clarification Announcement, the company's compound annual growth rate of 5 years reached 9.4%, maintaining a good growth momentum. But Deng Ruxi, Ramesh Dungarmal Tainwala, who was accused of false academic credentials, left office at the end of May, and Samsonite paid HK $22 million for the breakup fee.

　 Slowdown in China's market

Public information shows that Samsonite is the world's largest travel suitcase company, founded in 1910 in Colorado, USA, so far, it has more than 100 years of history. In June 2011, Samsonite was listed on the Hong Kong stock exchange. At present, it mainly designs, manufactures, purchases and distributes suitcases, business bags and computer bags, outdoor bags and leisure bags and tourist accessories. Its main brands include Samsonite, American Tourister, High Sierra, Tumi and so on.

In fact, in 2010, Samsonite was only a single Brand Company selling only suitcase products, mainly with wholesale business, with annual sales of $1 billion 200 million. In 2011, Samsonite launched the Hong Kong stock listing tour, and also started the development of M & a synchronously.

In July 2012, Samsonite spent $110 million on the US brand High Sierra, and in August, it bought us leather brand Hartmann for 35 million dollars. In April 2014, the French fashion trunks brand Lipault was acquired again; in May, the second largest mobile phone shell brand Speck of the United States was acquired; in July, the outdoor and adventure backpack brand Gregory was also included. In 2015, Samsonite once again sold the Italy bag brand Chic Accent in its pocket; in 2016, Samsonite again bought the high-end business case brand Tumi; in 2017, Samsonite bought the largest and the world's top luggage shopping website "eBags" wholly-owned.

Samsonite, once known as the "takeover madman", grew from $1 billion 565 million to $3 billion 797 million in 8 years, and its net sales increased by more than 2 times. Over the same period, Samsonite's debt rose from $599 million to $3 billion 150 million under the aggressive takeover strategy, which has more than 5 times. At the same time, the debt ratio of the group also showed a high trend. Data show that Samsonite's asset liability ratio increased from 38.80% in 2011 to 61.27% in 2018. At the end of the three quarter of this year, the asset liability ratio increased by 3.85% to 65.22%.

At the same time, as one of the main markets of Samsonite, China's sales growth has shown an overall slowdown in recent years. Data show that from 2011 to 2018, the net sales of Samsonite in the Chinese market increased by 57.4%, 20.4%, 5.3%, 18.7%, 13%, -0.4%, 7.2% and 6.9%, respectively.

Reporters landed at Samsonite's Tmall flagship store. Samsonite's products mainly include pull rod boxes, backpacks, handbags, belts and so on. In the flagpole store's pull rod box, the price of the ordinary adult pull rod box is basically over 1000 yuan, among which a high price 28 inch pull rod box sells for 7380 yuan.

Market analysts believe that Samsonite's slowdown in the Chinese market, on the one hand, is the high price of the brand, which is affected by the economic environment and the anti-corruption situation; on the other hand, the group will experience a gradual slowdown after its early rapid expansion.