Company Reports

Samsonite’s second-quarter sales were down 2% year over year and missed our expectations by 12%, though profit margins remained steady. Management lowered its full-year revenue guidance by approximately 7% and slightly reduced the adjusted EBITDA margin forecast by 20 basis points. Despite ongoing growth in global travel, Samsonite's reluctance to lower prices—which are about 20% higher than prepandemic levels—is significantly affecting the attractiveness of its products in the highly competitive luggage industry. We maintain our view that Samsonite will eventually abandon its current pricing strategy, opting instead to chase incremental profits at the expense of margins and its premium brand equity.

Samsonite's revenue and earnings faced significant challenges due to the impact of the coronavirus pandemic. Despite these pressures, the company took steps to safeguard its business, including drastic cost cuts. Now that travel has returned to prepandemic levels, Samsonite is poised to achieve impressive near-record profit margins in the near term. However, this positive momentum is unlikely to last over the long run.

Narrow-moat Samsonite’s first-quarter 2024 results were in line with our expectations. Nonetheless, management nudged down guidance for 2024 and mentioned that the competitive environment is heating up. We made minor updates to our model but kept our fair value estimate unchanged at HKD 27. Shares of Samsonite are fairly valued now, in our opinion.

Narrow-moat Samsonite’s fourth-quarter 2023 results were slightly behind our expectations. Nonetheless, management maintained guidance for 2024, while also emphasizing that they are vigilantly observing the competitive landscape and prevailing promotional dynamics. We made minor updates to our near-term forecasts, but have kept the bulk of our long-term assumptions unchanged. We maintain Samsonite’s fair value estimate of HKD 27 and we view shares as fairly valued currently. Although some investors point to the low price/earnings multiple as an indicator of more upside in the valuation, this belief is contingent on Samsonite's ability to maintain its current margin profile in the long run. However, we approach this optimism with caution. Our reluctance to project the current 20% adjusted EBITDA margin into perpetuity is due to the lack of evidence that the luggage industry will remain structurally less competitive, and more profitable, after covid-19.

We think shareholders can consider realizing some gains on their Samsonite holdings as information is circulating around a buyout involving private equity firms, as reported by Bloomberg on Tuesday. Shares surged as much as 16% on Tuesday, higher than our fair value estimate of HKD 27. Even though the shares look fairly valued to us now, there’s a possibility that potential bids could come at an even higher price to entice shareholder acceptance after considering the typical premium that private equity firms offer in such buyouts. Therefore, we think shareholders should take partial profits while monitoring further developments.

Narrow-moat Samsonite’s third-quarter earnings featured better-than-expected profitability, but weaker-than-expected sales. Management maintains 2023 guidance and issued 2024 guidance that is broadly in line with our estimates. Overall, we are maintaining our HKD 27 fair value estimate, and note that shares are trading just slightly undervalued, so buyers may want to wait for a better entry point.

Narrow-moat Samsonite’s second-quarter revenue came slightly below our expectations, but margins were ahead. Management lifted full-year adjusted EBITDA margin guidance to 19% from 18%, reaffirming our bullish near-term view. Overall, we maintain our HKD 27 fair value estimate and note that shares are trading just slightly undervalued, so buyers may want a larger margin of safety before investing in Samsonite shares.

Samsonite's revenue and earnings growth over the past few years was severely impacted by the trade war tariffs and the coronavirus outbreak. While both of these factors are outside of Samsonite's controls, we think the company has taken the right measures to position its business for a post-pandemic rebound. On the tariff front, Samsonite has already shifted the majority of its U.S. sourcing out of China into Southeast Asia. Over the next few years, we expect U.S. sourcing costs should come back down, resulting in persistent gross profit margin improvement. While the COVID-19 pandemic has wreaked havoc on the travel industry, Samsonite made good use of the time-off to have a deep look at its cost structure and identified USD 200 million in annualized permanent cost-savings (representing roughly 10% of its prepandemic SG&A). We think a more efficient cost structure should result in persistent improvement in profitability for the business.

Narrow-moat Samsonite’s first-quarter earnings were largely in line with our expectations, but beat Refinitiv consensus estimates. However, market reaction so far is muted, and while we lift our fair value estimate slightly to HKD 27 from HKD 26.50, we note that shares are trading just slightly undervalued, so buyers may want to allow for a larger risk/reward. Management edged up its 2023 adjusted EBITDA guidance to 18% from 17%, reaffirming our bullish near-term view, but we note that margins are close to peak and our projections forecast a margin pressure to materialize in 2024.

Samsonite's revenue and earnings growth over the past few years was severely impacted by the trade war tariffs and the coronavirus outbreak. While both of these factors are outside of Samsonite's controls, we think the company has taken the right measures to position its business for a post-pandemic rebound. On the tariff front, Samsonite has already shifted the majority of its U.S. sourcing out of China into Southeast Asia. Over the next few years, we expect U.S. sourcing costs should come back down, resulting in persistent gross profit margin improvement. While the COVID-19 pandemic has wreaked havoc on the travel industry, Samsonite made good use of the time-off to have a deep look at its cost structure and identified USD 200 million in annualized permanent cost-savings (representing roughly 10% of its prepandemic SG&A). We think a more efficient cost structure should result in persistent improvement in profitability for the business.

Narrow-moat Samsonite’s fourth-quarter results were in line with our and PitchBook consensus expectations. Management provided more upbeat guidance for 2023, following very encouraging sales trends in the first two months of 2023. Since we had already anticipated stronger growth and profitability this year, we only made minor changes to our near-term forecasts and keep the bulk of our long-term assumptions unchanged. After rolling forward our valuation model, we slightly increased Samsonite’s fair value estimate to HKD 26.50 from HKD 25.00. Samsonite's shares remain undervalued, trading at a 20% discount to our fair value estimate.

Samsonite's revenue and earnings growth over the past few years was severely impacted by the trade war tariffs and the coronavirus outbreak. While both of these factors are outside of Samsonite's controls, we think the company has taken the right measures to position its business for a post-pandemic rebound. On the tariff front, Samsonite has already shifted the majority of its U.S. sourcing out of China into Southeast Asia. Over the next few years, we expect U.S. sourcing costs should come back down, resulting in persistent gross profit margin improvement. While the COVID-19 pandemic has wreaked havoc on the travel industry, Samsonite made good use of the time-off to have a deep look at its cost structure and identified USD 200 million in annualized permanent cost-savings (representing roughly 10% of its prepandemic SG&A). We think a more efficient cost structure should result in persistent improvement in profitability for the business.

We raise our fair value estimate for Samsonite to HKD 25.00 from HKD 23.20, after China further relaxes COVID-19 controlling measures. The change to our valuation reflects greater steps toward reopening and specifically scrapping various travel restrictions. This benefits: 1) Samsonite's China sales, which contributed 9% of revenue before the pandemic but dropped to 7% of total revenue in the third quarter of 2022; and 2) purchases by Chinese consumers overseas, which we estimate to represent a low-single-digit percentage of Samsonite's sales. Coupled with heavy pent-up demand and a better margin profile in China, we lift our earnings forecasts by an average of 11% over the next three years. Shares of Samsonite are undervalued, trading at a 17% discount to our fair value.

Samsonite's revenue and earnings growth over the past few years was severely impacted by the trade war tariffs and the coronavirus outbreak. While both of these factors are outside of Samsonite's controls, we think the company has taken the right measures to position its business for a post-pandemic rebound. On the tariff front, Samsonite has already shifted the majority of its U.S. sourcing out of China into Southeast Asia. Over the next few years, we expect U.S. sourcing costs should come back down, resulting in persistent gross profit margin improvement. While the COVID-19 pandemic has wreaked havoc on the travel industry, Samsonite made good use of the time-off to have a deep look at its cost structure and identified USD 200 million in annualized permanent cost-savings (representing roughly 10% of its prepandemic SG&A). We think a more efficient cost structure should result in persistent improvement in profitability for the business.

Narrow-moat Samsonite delivered another impressive set of results in the third quarter, benefiting from the reopening of borders and the release of pent-up travel demand. The firm reported an adjusted EBITDA of USD 134 million for the third quarter of 2022, coming 11% higher than our estimate. With high-margin markets like Korea and Japan recently reopened, we expect Samsonite's sales growth to continue, leading to operating leverage and margin expansion. Moreover, recent news of China easing quarantine rules and scrapping flight bans suggests that its borders will eventually reopen as well.

Samsonite's revenue and earnings growth over the past few years was severely impacted by the trade war tariffs and the coronavirus outbreak. While both of these factors are outside of Samsonite's controls, we think the company has taken the right measures to position its business for a post-pandemic rebound. On the tariff front, Samsonite has already shifted the majority of its U.S. sourcing out of China into Southeast Asia. Over the next few years, we expect U.S. sourcing costs should come back down, resulting in persistent gross profit margin improvement. While the COVID-19 pandemic has wreaked havoc on the travel industry, Samsonite made good use of the time-off to have a deep look at its cost structure and identified USD 200 million in annualized permanent cost-savings (representing roughly 10% of its pre-pandemic SG&A). We think a more efficient cost structure should result in persistent improvement in profitability for the business.

Another strong set of results from narrow-moat Samsonite in the second quarter reaffirms our thesis on travel recovery. With sales growth continuing to increase momentum, operating leverage will grow, and margins should expand as we have forecast. We have fine-tuned our estimates and slightly lifted our fair value estimate to HKD 23.00 from HKD 22.10. With shares up more than 10% at the market open on Aug. 18, we now view Samsonite as only modestly undervalued.

Samsonite's revenue and earnings growth over the past few years was severely impacted by the trade war tariffs and the coronavirus outbreak. While both of these factors are outside of Samsonite's controls, we think the company has taken the right measures to position its business for a post-pandemic rebound. On the tariff front, Samsonite has already shifted the majority of its U.S. sourcing out of China into Southeast Asia. Over the next few years, we expect U.S. sourcing costs should come back down, resulting in persistent gross profit margin improvement. While the COVID-19 pandemic has wreaked havoc on the travel industry, Samsonite made good use of the time-off to have a deep look at its cost structure and identified USD 200 million in annualized permanent cost-savings (representing roughly 10% of its pre-pandemic SG&A). We think a more efficient cost structure should result in persistent improvement in profitability for the business.

Narrow-moat Samsonite again reported a strong set of results in the first quarter, with a rapid sales recovery and operating leverage. As the effects of COVID-19 on everyday life moderate across most of the world, we expect company sales to continue to recover over the next few quarters. Given Samsonite's limited exposure to China, we expect current lockdowns to have limited impact on Samsonite’s top-line recovery. We made minor adjustments to our model but maintained our fair value estimate at HKD 22.10. We believe the shares are undervalued, trading at a discount of around 30% to our value. Sales momentum continued in the first quarter for Samsonite—the group pulled in 63% revenue growth compared to the same period in 2021. Relative to pre-pandemic periods, sales reached 72% of their levels in the first quarter of 2019. Looking into the second quarter, China will certainly be a drag on sales, but the negative impact is limited to the group's high-single-digit percentage sales exposure to the country. During the first quarter, sales in China were trending at 65% to 70% versus 2019, but lockdown measures imposed in April restricted sales to just 20% of pre-pandemic levels. That said, we believe China sales have rebounded in May, now back to 30%-35% of 2019 levels, according to management.

Narrow-moat Samsonite's fourth-quarter earnings reinforce our view that the firm will emerge from the pandemic as a more profitable business than ever before. As the effects of COVID-19 on everyday life moderate, demand for travel would only increase, translating to growing sales of Samsonite's luggage. The group has little exposure to Russia and Ukraine, with the two regions contributing just 2% of revenue. Demand in the rest of Europe has not been impacted by the war in Ukraine. Samsonite's shares remain attractive, trading at 16 times 2022 earnings and 12 times 2023 earnings. We maintain our fair value estimate at HKD 22.10, a valuation that implies a 38% upside in share price.