Samsonite Group (SEHK:01910) Q3 2025 Earnings Call November 12, 2025 09:00 AM ET Company ParticipantsWilliam Yue - VP of Investor RelationsKyle Francis Gendreau - CEOReza Taleghani - CFOErwan Rambourg - Head of Consumer and Retail ResearchConference Call ParticipantsChris Gao - AnalystAnne Ling - AnalystOperatorMorning, good afternoon, and good evening, ladies and gentlemen. Welcome to the Samsonite Group 2025 third quarter results conference call. At this time, all participants are in listen-only mode. Aft ...

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Financial Data and Key Metrics Changes - The company reported net sales of $1,662 million for the first half, a decrease of 5.2% compared to the previous year, but still up 24.4% compared to pre-pandemic levels in the first half of 2019 [16][18][19] - Gross margin remained robust at 59.2%, slightly down from 60% in the previous year, primarily due to a mix effect and strategic promotional initiatives [11][19] - Adjusted EBITDA margin was 16.2%, reflecting a decrease from 19% in the prior year, influenced by lower gross margin and higher SG&A expenses [49][56] Business Line Data and Key Metrics Changes - The wholesale channel experienced a decline of 7.4% in the first half, while the direct-to-consumer (DTC) channel only declined by 1.6%, indicating stronger resilience in consumer demand through direct channels [6][19] - Non-travel categories showed constant currency growth, with non-travel sales up 180 basis points to 36.2% compared to the prior year [9][26] Market Data and Key Metrics Changes - North America sales were down 7.3%, showing improvement from a 8% decline in Q1, while Asia saw a decline of 7.6% [50][51] - Europe experienced a slight decline of about 1% in Q2, with specific markets like France and the UK showing weakness [54] Company Strategy and Development Direction - The company is focusing on profitable growth and brand positioning, avoiding competition with low-priced unbranded products to protect profitability [8] - Strategic investments in the DTC channel are yielding positive results, with DTC now accounting for 40% of net sales, up from 38% last year [9][23] - The company is committed to product innovation and expanding its market presence, particularly in underpenetrated categories and regions [12][34] Management's Comments on Operating Environment and Future Outlook - Management noted that while travel demand remains strong, there is a softening in consumer sentiment due to macroeconomic uncertainties and trade policy shifts [6][70] - The company anticipates sequential improvement in net sales for the back half of the year, although consumer sentiment remains difficult to predict [70][72] Other Important Information - The company has added 57 net new stores since June 2024, with distribution and G&A expenses up less than 1% compared to the prior year [10][60] - The company is preparing for a dual listing of its securities in the United States, monitoring market conditions closely [73] Q&A Session Summary Question: Updates on full year guidance and strategy for American Tourister - Management sees sequential improvement in the back half of the year but refrains from providing specific Q4 guidance due to uncertainty [79] - For American Tourister, the strategy involves disciplined management and leveraging collaborations to draw consumers into the brand while navigating competitive pressures [82][84] Question: Details on tariff impacts and inventory management - Management indicated that a combination of price increases, supplier negotiations, and forward inventory purchases will help neutralize tariff impacts on gross margin [91] - Inventory levels have increased intentionally to prepare for future sales, with expectations of working capital returning to historical levels [93]

Financial Data and Key Metrics Changes - The company reported net sales of $1,662 million for the first half, a decrease of 5.2% compared to the previous year, but still up 24.4% compared to pre-pandemic levels in the first half of 2019 [16][18][54] - Gross margin remained robust at 59.2%, slightly down from 60% in the same period last year, primarily due to a mix effect and strategic promotional initiatives [11][54] - Adjusted EBITDA margin was 16.2%, reflecting a decrease from 19% last year, attributed to lower gross margin and higher SG&A expenses [47][54] Business Line Data and Key Metrics Changes - The wholesale channel experienced a decline of 7.4% in the first half, while the direct-to-consumer (DTC) channel only declined by 1.6%, indicating stronger resilience in consumer demand through direct channels [6][19] - Non-travel categories showed constant currency growth, now representing 36.2% of net sales, up 180 basis points from the previous year [10][24] - The American Tourister brand faced a significant decline of 12.7%, while the Samsonite brand was down 4.7%, with Tumi showing a modest decline of 2.5% [25][27] Market Data and Key Metrics Changes - North America sales were down 7.3%, with Asia down 7.6%, while Europe showed a slight decline of about 1% [49][50] - Latin America remained flat in Q1 and down 2.2% in Q2, driven by consumer sentiment issues in Mexico and Brazil [53][54] - The company noted a softening in travel demand in key markets, particularly in North America, influenced by macroeconomic uncertainties [6][70] Company Strategy and Development Direction - The company is focused on profitable growth and brand positioning, consciously avoiding competition with low-priced unbranded products to protect profitability [7][10] - Strategic investments in the DTC channel are yielding positive results, with DTC now accounting for 40% of net sales, up from 38% last year [8][23] - The company is committed to product innovation and expanding its market reach, particularly in underpenetrated categories and regions [32][33] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in long-term growth despite current macroeconomic challenges, indicating that travel demand remains a priority for consumers [70][71] - The company anticipates sequential improvement in net sales for the second half of the year, although consumer sentiment remains uncertain [68][70] - Ongoing investments in new products and brand elevation are seen as critical for maintaining a robust margin profile [70][71] Other Important Information - The company added 57 net new stores since June 2024, while managing distribution and G&A expenses to remain up less than 1% compared to the prior year [10][60] - The company is preparing for a dual listing of its securities in the United States, closely monitoring market conditions for the right timing [71][72] Q&A Session Summary Question: Can you provide updates on full year guidance and strategy for American Tourister? - Management indicated that while there are signs of improvement in the third quarter, full year guidance remains uncertain due to macroeconomic factors. The strategy for American Tourister involves disciplined management and targeted promotions to draw consumers up from lower-end competition [76][80][82] Question: What details can you share regarding tariffs and inventory management? - Management confirmed that efforts are being made to neutralize the impact of tariffs through a combination of price increases and inventory management. The increase in inventory is intentional to prepare for future sales, and free cash flow is expected to improve as inventory levels normalize [87][90][92]

Financial Performance - 1H 2025 net sales were US$1,662 million, a decrease of 5.2% compared to 1H 2024, but still up 24.4% compared to pre-pandemic 1H 2019[29] - Wholesale channel net sales were down 7.4%, while the DTC channel was down only 1.6% in 1H 2025[29] - Gross margin for 1H 2025 was 59.2%, a decrease of 100 basis points from 1H 2024, but still up 320 basis points compared to 1H 2019[29] - Adjusted EBITDA for 1H 2025 was US$269 million, representing an adjusted EBITDA margin of 16.2%, which was 400 basis points higher than 1H 2019[29] - Q2 2025 net sales decreased by 5.8% from Q2 2024[74] Channel and Category Diversification - DTC mix in 1H 2025 was approximately 40% of net sales, an increase from approximately 38% in the same period last year[34] - Non-travel net sales penetration increased by approximately 180 basis points to 36.2% in 1H 2025 compared to the prior year[34] Brand Performance - TUMI grew 18.6% and 6.2% in Latin America and Europe, respectively, but declined 2.5% in Asia and 4.7% in North America[38] - Gregory brand had strong growth of 14.7% in 1H 2025[44] Financial Position - Combined 1H 2025 distribution and G&A expenses of US$644 million were up just 0.8% compared to 1H 2024[93] - Net debt position was US$1,162 million as of June 30, 2025, with a calculated total net leverage ratio of 1.85x[93] - Liquidity of approximately US$1.4 billion as of June 30, 2025, including cash of US$669 million[93]