Samsonite Group S.a. · HKEX:1910
Samsonite — Samsonite International — Q3 2019 Earnings Presentation
30 slides from Samsonite's earnings presentation, Nov 14, 2019
Slide 1: 2019 Third Quarter Results
Sams@nite #V THI 2019 Third Quarter Results SAMSONITE INTERNATIONAL S.A. STOCK CODE: 1910 Sams@nite BORN TOGO
Slide 2: Disclosure Statement
Disclosure Statement This presentation and the accompanying slides (the “Presentation”) which have been prepared by Samsonite International S.A. (“Samsonite” or the “Company”) do not constitute any offer or invitation to purchase or subscribe for any securities, and shall not form the basis for or b
Slide 3: Business Overview
Business Overview Page 3 Sams@nite
Slide 4: Overall performance remains stable despite a few challenged markets
Overall performance remains stable despite a few challenged markets Total company Q3 net sales were just slightly down by 0.7%(1) despite headwinds in some of our key markets. Excluding the four challenged markets of the U.S., South Korea, Hong Kong(3) and Chile net sales growth for the quarter was
Slide 5: All regions delivered Q3 net sales growth, except North America
All regions delivered Q3 net sales growth(1), except North America Constant Currency -7.6% 4.0% 3.7% 1.1% Growth +12.0%(1), excluding +2.9%(1), South Korea and excluding Chile Hong Kong(2) (1) Stated on a constant currency basis. Page 5 (2) Refer to footnote 3 on slide 4.
Slide 6: Net sales growth excluding challenged markets up 7.2% in Q3
Excluding the headwinds in certain challenged markets, net sales growth continues to improve, up 7.2%(1) in Q3 = Indicates constant currency growth over prior year quarter $923.7M $921.5M $832.0M = $337.1 = $322.3 -5.1% -7.5% = $287.7 = $44.0 = $45.2 -6.1% -9.9% -14.1% -5.2% -9.9% (2) = $54.1 (2) =
Slide 7: The U.S. business is being impacted by increased tariffs and reduced Chinese tourist traffic
The U.S. business is being impacted by increased tariffs and reduced Chinese tourist traffic YTD September U.S. sales were down 6.2% due largely to the impact of higher tariffs and reduced Chinese tourist traffic(1). YTD sales were down 4.0%, excluding eBags, where we are reducing less profitable 3r
Slide 8: Management is taking significant ongoing actions in the U.S. to mitigate tariff increases
Management is taking significant ongoing actions in the U.S. to mitigate the impact of tariff increases Actions to mitigate tariff increases Accelerated sourcing of product outside of China that will continue in Q4 and 2020. Re-engineering product to reduce costs, while maintaining high quality stan
Slide 9: Underlying China business remains strong, with less reliance on B2B sales
Underlying China business remains strong, with less reliance on B2B sales Year-over-Year Constant Currency Sales Growth Q4 2018 Q1 2019 Q2 2019 Q3 2019 China Non-B2B 20.0% 5.9% 11.2% 10.0% China B2B -16.0% -43.3% -16.4% 17.4% Total China 10.7% -8.3% 5.1% 11.2% To reduce sales volatility, B2B sales h
Slide 10: South Korea and Chile continue to be challenged markets
South Korea and Chile continue to be challenged markets, with additional turbulence from political unrest in Hong Kong Hong Kong South Korea Chile YTD September net sales were down 10.5%(1) as the macro-economic environment continues to be challenging due to weak consumer sentiment and lower Chinese
Slide 11: Management remains focused on repositioning the business for long term growth and profitability
Management remains focused on repositioning the business for long term growth and profitability Net sales are stable overall, delivering solid growth throughout the world, but facing challenges in a handful of key markets. Very strong cash flow generation continues, with YTD September 2019 cash flow
Slide 12: 3rd Quarter 2019 Results
3rd Quarter 2019 Results Page 12
Slide 13: 3rd Quarter 2019 Results Highlights
3rd Quarter 2019 Results Highlights 3rd quarter sales are down Gross margin was down Excluding the negative impact of Excluding the negative impact 0.7%(1) due to continued 171bp from Q3 2018 largely IFRS 16(2), Adjusted EBITDA of IFRS 16(2), Adjusted Net headwinds in the U.S., South due to the impa
Slide 14: IFRS 16 significantly increases Adjusted EBITDA as traditionally reported
IFRS 16 significantly increases Adjusted EBITDA as traditionally reported (which excludes lease-related amortization and interest expense) Indicates % of net sales (1) (1) For comparative purposes, Management believes Adjusted EBITDA, including lease amortization and lease interest expenses is a mor
Slide 15: Net sales and gross margin decrease mitigated through tight control of SG&A costs
Net sales and gross margin decrease mitigated through tight control of SG&A costs and advertising reduction Adjusted EBITDA(3) Bridge Q3 ($20.2)(1) +$7.0(1) Significant improvement from ($19.1) million in Q1 and ($7.9) million in Q2. (2) (1) (1) (1) (1) (1) Stated on a constant currency basis. (2) “
Slide 16: Decreased Adjusted Net Income driven mainly by lower Adjusted EBITDA
Decreased Adjusted Net Income(3) driven mainly by lower Adjusted EBITDA Adjusted Net Income Bridge 3Q Even though the quarter has a negative impact from taxes, YTD Sep19 effective tax rate of 24.1% is favorable to YTD Sep18 effective tax rate of 25.7%. (2) (1) (1) Excludes lease interest expense. (2
Slide 17: All regions delivered Q3 net sales growth, except North America
All regions delivered Q3 net sales growth(1), except North America Constant Currency -7.6% 4.0% 3.7% 1.1% Growth +12.0%(1), excluding +2.9%(1), South Korea and excluding Chile Hong Kong(2) (1) Stated on a constant currency basis. Page 17 (2) Refer to footnote 3 on slide 4.
Slide 18: All three core brands achieved positive Q3 net sales growth
All three core brands achieved positive Q3 net sales growth Net Sales Growth by Brand Samsonite net sales up 1.0%(1), which is improved from a 2.4%(1) decrease in the 1st half of 2019. Growth was 5.0%(1) excluding the four challenged markets. Tumi net sales growth was 0.6%(1) with growth in Europe +
Slide 19: YTD September 2019 Results
YTD September 2019 Results Page 19
Slide 20: YTD September 2019 Results Highlights
YTD September 2019 Results Highlights (2) (2) Constant currency net sales Gross margin was down 89bp Excluding the negative impact of Excluding the negative impact of decrease of 1.2% was due to from prior year largely reflecting IFRS 16(2), Adjusted EBITDA margin IFRS 16(2), Adjusted Net Income eco
Slide 21: IFRS 16 significantly increases Adjusted EBITDA as traditionally reported
IFRS 16 significantly increases Adjusted EBITDA as traditionally reported (which excludes lease-related amortization and interest expense) Indicates % of net sales (1) (1) For comparative purposes, Management believes Adjusted EBITDA, including lease amortization and lease interest expenses is a mor
Slide 22: Management is continuing to rationalize our store portfolio
Management is continuing to evaluate and rationalize our store portfolio to improve retail channel profitability The Company continues its efforts to renegotiate or exit loss-making retail locations if able to reach acceptable exit terms with landlords. YTD September we have taken non-cash impairmen
Slide 23: Adjusted EBITDA shortfall improving every quarter
Adjusted EBITDA(3) shortfall improving every quarter despite increased gross margin pressure Q1 $122.9 ($5.9) $116.9 ($3.7) ($11.9) $1.0 $1.4 ($19.1) $84.6 $(28.6) Q2 $153.9 ($5.9) $148.1 ($4.3) ($3.8) ($9.1) $5.9 ($7.9) $128.9 $(15.0) Q3 $154.6 ($5.0) $149.6 ($2.4) ($3.8) ($16.4) $9.5 ($2.5) $133.9
Slide 24: Decreased Adjusted Net Income driven mainly by lower Adj. EBITDA
Decreased Adjusted Net Income(3) driven mainly by lower Adj. EBITDA, partly offset by lower effective tax rate and interest expense Adjusted Net Income Bridge YTD Sep (2) (1) (1) Excludes lease interest expense. (2) YTD Sep 2018 (IFRS 16)” presents the Group's financial performance for the nine mont
Slide 25: All regions have positive YTD growth except North America
All regions have positive YTD growth except North America Constant Currency -6.3% 1.4% 2.5% 2.7% Growth +6.9%(1), excluding +8.7%(1), South Korea, China excluding Chile B2B and Hong Kong(2) (1) Stated on a constant currency basis. Page 25 (2) Refer to footnote 3 on slide 4.
Slide 26: YTD September Net Sales by Brand
YTD September Net Sales by Brand Net Sales Growth by Brand Samsonite net sales decreased 1.2%(1) mainly due to the market challenges in the U.S., South Korea and Hong Kong. Tumi net sales growth of 3.4%(1) was driven by expansion in Asia +9.1%(1) (+14.5%(1)(2) excluding South Korea, China B2B and Ho
Slide 27: Continued progress in driving direct-to-consumer net sales growth
Continued progress in driving direct-to- consumer (“DTC”) net sales growth DTC net sales growth of 2.6%(1) (5.1%(1) excluding eBags). 36.1% of total Company net sales came from DTC channels Direct-to-consumer Net Sales in YTD September 2019 compared to 34.7% in YTD September 2018. 34.7% of total 36.
Slide 28: Advertising spend as a percentage of sales was slightly reduced
Advertising spend as a percentage of sales was slightly reduced, helping to offset reduced gross margin (1) Indicates % of net sales Reduced by US$16.8 million on a constant currency basis. (1) In addition to the regional advertising expenses, Corporate also had advertising expense of US$2.4 million
Slide 29: Balance Sheet
Balance Sheet US$m September 30, December 31, September 30, $ C hg S e p- 19 % C hg S e p- 19 Net debt decreased by US$146.7 2018 2018 2019 v s . S e p- 18 v s . S e p- 18 million since September 30, 2018. Cash and cash equivalents 341.4 427.7 395.7 54.3 15.9% Trade and other receivables, net 403.8
Slide 30: Working Capital
Working Capital Net working capital efficiency of 15.3% as of US$m September 30, September 30, $ Chg Sep-19 % Chg Sep-19 September 30, 2019 showing improving trend 2018 2019 vs. Sep-18 vs. Sep-18 2018 2019 Change Working Capital Items Q1 14.5% 16.7% 220bp Inventories $ 652.3 $ 622.9 $ (29.4) -4.5% T
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