Financial Data and Key Metrics Changes - The company achieved net sales of $1.76 billion in the first half of 2024, representing a growth of 2.8% compared to the exceptional first half of the previous year [3][26] - Gross margin reached a record level of 60.2%, up 140 basis points from last year, driven by disciplined promotional management and strong growth in direct-to-consumer (DTC) channels [3][4] - Adjusted EBITDA for the first half was $333 million, with a record adjusted EBITDA margin of 18.9%, up 10 basis points year-over-year [4][26] - Free cash flow increased to $82 million, an improvement of $18 million from the previous year [4][33] Business Line Data and Key Metrics Changes - The Samsonite brand experienced growth of approximately 6.6%, while the Tumi brand was up around 0.3%, indicating a more resilient mid-market performance compared to the premium segment [8][14] - DTC sales grew by 4.7%, with e-commerce sales increasing by 10%, contributing positively to the overall gross margin [35] - American Tourister's sales were impacted by competitive discounting in India, resulting in a slight decline in net sales [15][30] Market Data and Key Metrics Changes - North America saw flat growth, with Tumi down 1.5% for the half, while excluding Tumi, the other brands showed slight growth [31][32] - Asia reported a constant currency growth of 2%, with China experiencing a 7.6% increase in net sales for the half, but a decline of 3.5% in Q2 [27][29] - Latin America continued to perform well with a revenue growth of 20.3% year-over-year [27] Company Strategy and Development Direction - The company is pursuing a dual listing in the United States to enhance liquidity and accessibility for shareholders [5][40] - Focus remains on driving high-quality sales and building a foundation for long-term profitable growth, particularly through increased advertising spend [41][42] - The company is committed to sustainability, with initiatives aimed at reducing carbon emissions and increasing the use of recycled materials in products [22][24] Management's Comments on Operating Environment and Future Outlook - Management noted a softer consumer sentiment in key markets, particularly in North America and Asia, which may impact sales trends in the second half of the year [40][41] - Despite current challenges, the company remains optimistic about the long-term growth potential in the travel sector, expecting to return to mid to upper single-digit growth in 2025 [59] - The company is strategically positioning its brands to capture market share in China and India, focusing on maintaining brand integrity while navigating competitive pressures [56][57] Other Important Information - The company announced a share buyback program of up to $200 million and reinstated its annual cash distribution of $150 million [35][34] - Fixed SG&A expenses increased by $17 million year-over-year, but remained flat compared to the second half of the previous year, despite opening 31 new stores [33][37] Q&A Session Summary Question: Concerns about gross margins amidst increased promotional activity - Management emphasized maintaining discipline in promotional strategies to protect gross margins while still driving sales [46][48] Question: Strategies to counteract pressures in China and India - The company is applying successful strategies from India to the mid-tier market in China and focusing on maintaining brand positioning without excessive promotions [52][56] Question: Growth expectations for 2025 - Management anticipates returning to mid to upper single-digit growth, contingent on consumer sentiment and travel dynamics [59]
SAMSONITE(SMSEY) - 2024 Q2 - Earnings Call Transcript