Samsonite Group S.a. · HKEX:1910
Samsonite — Samsonite International — H1 2019 Earnings Presentation
40 slides from Samsonite's earnings presentation, Aug 21, 2019
Slide 1: 2019 Interim Results
Sams@nite #V THI 2019 INTERIM RESULTS AUGUST 21, 2019 SAMSONITE INTERNATIONAL S.A. Sams@nite BORN To Go STOCK CODE: 1910
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: Company is managing through the macro headwinds in certain markets
Company is managing through the macro headwinds in certain markets that began in the 2nd half of 2018 Since Q3 2018 we had anticipated certain market challenges. Management has taken actions to counter effects of the macro-economic challenges in certain parts of the business and position the Company
Slide 5: The business is stable and positioned well for improved sales and profitability
The business is stable and positioned well for improved sales and profitability despite continuing headwinds in certain markets Total company net sales Accelerated cost reduction U.S./China trade tensions stabilizing in Q2, down just initiatives during Q2 to position continued in Q2 with an 0.7%(1)
Slide 6: All regions are delivering net sales growth, except North America
All regions are delivering net sales growth(1), except North America due to continued U.S./China tariff and tourist traffic impacts Constant Currency -5.7% 0.2% 1.9% 3.4% Growth +4.6%(1), excluding Against strong -2.8%(1) in Q1 China B2B and growth of 11.4%(1) +12.5%(1) in Q2 South Korea in 1H 2018
Slide 7: Net sales showing signs of stabilization with Q2 down just 0.7%
Net sales showing signs of stabilization with Q2 down just 0.7%(1) against a strong Q2 2018 which was up 9.3%. Positive trends to continue into Q3. (2) High net sales growth in Q1 and Q2 of 2018 driven by global American Tourister advertising campaign. As we comp strong prior year 1st half growth of
Slide 8: Excluding FX, net sales were down US$28m against the prior year
Excluding the impact of FX, net sales were down US$28m against the prior year growth of US$205m(1), with improving trend in Q2 Net Sales Bridge Q1 $733.5 $888.2 ($35.2) ($18.8) ($9.8) ($4.7) ($3.5) $15.8 $832.0 Q2 $852.6 $960.5 ($30.0) ($18.1) ($2.8) ($5.2) $0.5 $18.7 $923.7 Improving trend excludin
Slide 9: Management's focused actions position the Company for improved profitability
Management’s focused actions position the Company for improved profitability Reduce SG&A Expense Maintained tight control over non-advertising SG&A expenses, including headcount reductions resulting in approximately US$14 million annualized savings with an associated cost incurred to deliver the sav
Slide 10: Adjusted EBITDA shortfall significantly improved in Q2 compared to Q1
Adjusted EBITDA(3) shortfall significantly improved in Q2 compared to Q1 and initiatives will benefit the 2nd half and into 2020 Total change with 2018 Adjusted EBITDA Bridge recast on IFRS 16 basis(1) 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
Slide 11: Management actions are having a positive impact on profitability
Management actions are having a positive impact on profitability -300bp -150bp (3) (3) (3) Q1 EBITDA margin bridge(1) Q2 EBITDA margin bridge(1) 1H EBITDA margin bridge(1) Q1 2018 (IFRS 16) Adj. EBITDA 13.2% Q2 2018 (IFRS 16) Adj. EBITDA 15.4% 1H 2018 (IFRS 16) Adj. EBITDA 14.3% Change in gross marg
Slide 12: 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 Improving Trend: Q1 $(18.4) million(4) Q2 $4.2 million(4) US$3.8 million lower depreciation, US$1.6 million lower stock comp expense and US$3.
Slide 13: Strong growth in DTC e-commerce net sales across all regions
Strong growth in DTC e-commerce net sales across all regions Constant Currency net sales growth of DTC e-commerce(1) North America Asia Europe Latin America Total Group +20.6%(1) +27.5% +18.8% +112.8% +23.9%(1) Traffic to our e-commerce websites was up 6.6% over the same period last year. Average or
Slide 14: Non-travel products continue to become a larger proportion of net sales
Non-travel products continue to become a larger proportion of total net sales Non-travel net sales grew by 1.0%(1) excluding the intentional phase out of certain lower margin 3rd party brand sales on the eBags platform. Net sales of non-travel products increased as a percentage of total by 60bp from
Slide 15: Continue to expand our ESG program
Continue to expand our Environmental, Social, and Governance (ESG) program We introduced our new sustainability strategy that will guide our journey to be the most sustainable travel luggage company in the world. This is a long-term program, including stretching goals and targets to 2030, and it wil
Slide 16: Exciting and innovative new products
Exciting and innovative new products High Tech Lightweight and strong Eco-friendly Gregory – Baltoro 75 Includes an integrated Goal Zero Nomad 7 Plus solar panel and Flip 10 charger. Samsonite - Magnum Samsonite – NeoKnit Our lightest, toughest, safest 3-point lock New collection made from 100% RPET
Slide 17: 1st Half 2019 Results
1*t Half 2019 Results Page 17 Sams@nite
Slide 18: 1st Half 2019 Results Highlights
1st Half 2019 Results Highlights (2) (2) Slight net sales decrease of Gross margin decreased by Excluding the negative impact of Excluding the negative impact of 1.5%(1) is mainly attributable to 50bp compared to prior year IFRS 16(2), Adjusted EBITDA IFRS 16(2), Adjusted Net Income U.S./China trade
Slide 19: 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) (1) (1) For comparative purposes, Management believes Adjusted EBITDA, including lease amortization and lease interest expenses is a more appropriate measure bec
Slide 20: Management actions to reduce non-advertising SG&A expenses
Management actions to reduce non-advertising SG&A expenses that will positively impact future results. Management initiated several actions that resulted in headcount reductions and management changes: Reorganized the retail management team in Europe Various other cutbacks in each region including h
Slide 21: Evaluation and rationalization of store portfolio resulted in impairment charges
Evaluation and rationalization of store portfolio resulted in non-cash impairment charges Ongoing traffic reductions in our North American gateway stores, impact of tariffs on store performance and rapid retail expansion in Europe in 2017 and 2018 necessitated some corrective action within our exist
Slide 22: Non-advertising SG&A increase over prior year is slowing
Non-advertising SG&A(1) increase over prior year is slowing as pace of retail expansion in Europe has eased and profit improvement initiatives have begun to take effect Non-advertising SG&A Bridge Q1 $325.8 $6.3 $332.1 ($14.3) $11.9 $2.6 $7.1 $0.6 ($3.1) $336.9 Q2 $326.8 $6.2 $333.0 ($11.4) $4.9 $2.
Slide 23: Profit attributable to equity holders excluding non-operating expenses and IFRS 16
Excluding non-operating expenses in both years and the negative impact of IFRS 16, profit attributable to equity holders is down US$13.8 million, or 13.9%. Q1 US$(17.4) million Q2 US$3.6 million US$53.3 million excluding the US$9.8 million impact of tax. excluding the impact of tax. (1) (1) “Adjuste
Slide 24: North America – Net sales decreased by 5.7%
North America – Net sales decreased by 5.7%(1) due mainly to effects of U.S./China trade tensions U.S./China trade tensions led to lower tourism traffic in U.S. gateway markets and more tepid wholesale customer purchasing with our own gateway store traffic down 15-20% from the same period last year.
Slide 25: Asia – Increase in net sales was driven by Tumi
Asia – Increase in net sales was driven by Tumi growth of 11.9%(1) and 8.7%(1) growth in China excluding B2B while maintaining strong Adjusted EBITDA margin Excluding China B2B and South Korea, net sales for the Asia region grew by 4.6%(1) with India +9.2%(1) and Japan +4.8%(1). Excluding B2B, China
Slide 26: Europe – Net sales growth of 1.9% against a strong 1H 2018
Europe – Net sales growth of 1.9%(1) against a strong 1H 2018 1H 2018 grew by 11.4%(1) compared to 1H 2017 due to American Tourister advertising campaign that drove 49.5%(1) net sales increase of that brand in 1H 2018. Tumi sales increased by 20.4%(1) as the brand gains momentum throughout the regio
Slide 27: Latin America – Q2 back to strong double-digit growth
Latin America – Q2 back to strong double-digit growth after slow Q1 Net sales growth improved in all key countries in Q2 with growth of 12.5%(1) after decreasing 2.8% in Q1(1). Mexico -6.6%(1) in Q1, +15.4%(1) in Q2 Chile -12.6%(1) in Q1, +4.5%(1) in Q2 Brazil +3.9%(1) in Q1, +6.8%(1) in Q2 Adjusted
Slide 28: DTC channel sales continue to become a larger proportion of total sales
Direct-to-consumer (DTC) channel sales continue to become a larger proportion of total sales driven by growth of DTC e-commerce Direct-to-Consumer Net Sales Total DTC net sales growth of 4.2%(1) 33.6% of total 35.6% of total Retail net sales increased by 3.3%(1) despite same $620.6 $624.8 store comp
Slide 29: Net Sales by Brand
Net Sales by Brand Samsonite net sales decreased by 2.4%(1) mainly due to the market challenges in the U.S., China B2B and South Korea. Tumi net sales growth of 4.8%(1) led by strong growth in Asia +11.9%(1) and Europe +20.4%(1). Tumi sales in North America were down 2.9%(1) due to stopping sales to
Slide 30: Tumi brand net sales growth of 4.8%
Tumi brand net sales growth of 4.8%(1) led by growth of 14.9%(1) outside North America Direct-to-consumer channel was up 0.7%(1) with Strong net sales growth of 11.9%(1) coming Net sales growth of 20.4%(1) driven mainly by DTC e-commerce +23.9%(1) offsetting retail mainly from DTC channels with DTC
Slide 31: Advertising spend as a percentage of net sales was slightly down
Advertising spend as a percentage of net sales was slightly down Indicates % of net sales On a constant currency basis, advertising spend was down approximately US$7.3 million against 1H 2018 advertising spend that was higher due to the timing of the American Tourister global marketing campaign. 1H
Slide 32: Global advertising campaigns focus on rejuvenating Samsonite and Tumi
Global advertising campaigns focus on rejuvenating Samsonite and driving Tumi brand awareness Samsonite “Born to Go” global campaign Tumi global campaign featuring appeals to millennial travelers. Lenny and Zoë Kravitz Page 32
Slide 33: Financial Highlights
Financial Highlights Net sales stabilized in Q2, down just 0.7%(1) from prior year which is improved from Q1 sales decrease of 2.4%(1) against a strong Q1 2018. Adjusted Net Income decreased by US$14.2 million, or 12.8%, as compared to prior year (as recast to adjust for IFRS 16 impacts(2)), due mai
Slide 34: Financial Highlights (cont.)
Financial Highlights (cont.) Net working capital efficiency of 14.8% is 80bp higher than at June 30, 2018, which is an improvement from 16.7% at March 31, 2019, which was 220bp higher than at March 31, 2018. Capital expenditures of US$26.0 million in 1H 2019 reflect a reduction from US$41.1 million
Slide 35: Year-over-year, Q2 showed significant improvement over Q1
Year-over-year, Q2 showed significant improvement over Q1 with signs of stabilizing sales and profitability Change vs. Prior Year(3) Q1 2019 vs. Q2 2019 vs. 1H 2019 vs. Y-O-Y comparison, excluding the impact of currency Q1 2018 Q2 2018 1H 2018 and prior year on an IFRS 16 basis: Net sales Growth(1)
Slide 36: Balance sheet
Balance sheet US$m June 30, December 31, June 30, $ C hg J un- 19 % C hg J un- 19 Net debt decreased by US$75.4 million 2018 2018 2019 v s . J un- 18 v s . J un- 18 in the first half of 2019 driven by Cash and cash equivalents 395.4 427.7 489.3 93.9 23.7% improved cash flows from operations Trade an
Slide 37: Working Capital
Working Capital US$m June 30, June 30, (1) Working capital efficiency of 14.8% at June 30, $ Chg Jun-19 % Chg Jun-19 2018 2019 vs. Jun-18 vs. Jun-18 2019 is slightly higher than prior year but improved Working Capital Items from Q1. Inventories $ 624.2 $ 626.2 $ 2.0 0.3% 2018 2019 Change Trade and O
Slide 38: Capital Expenditures
Capital Expenditures Capital Expenditure by project type Lower retail capex in 1H 2019 is due to the slower pace of new retail store openings, US$m 1H 2018 1H 2019 particularly in Europe. 1H 2019 retail capex consisted of new stores and remodels in North Retail 22.6 16.2 America of US$6.2 million, E
Slide 39: Company strategy remains strong
Company strategy remains strong The Company aims to increase shareholder value through sustainable revenue and earnings growth and free cash flow generation. In order to achieve this objective, the Company has adopted the following principal strategies: Deploy multiple brands to operate at wider pri
Slide 40: Recap of key initiatives
Recap of key initiatives Ensure teams are energized and empowered to deliver growth in each region. Continue to expand Tumi’s brand presence in international markets. Continue direct-to-consumer e-commerce growth strategy and focus on improving the profitability of the eBags business. Monitor sales
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