Samsonite Group (1910) H1 2014 earnings summary

Executive summary

• H1 net sales rose 13.8% in constant currency; excluding Speck, underlying growth was ~12.7%. Adjusted EBITDA increased 14%, with a record 16.9% margin, and net income rose 13.9%.

• Growth was broad-based across regions and brands; management highlighted organic travel-market growth, acquisitions, and expansion of retail and e-commerce as key growth levers.

Financial highlights

• Constant-currency gross profit increased 12.6%; gross margin expanded 10 bps. Adjusted EBITDA rose 14%, while EBITDA margin increased 30 bps to 16.9%.

• Adjusted net income and EPS increased 14%; the effective tax rate edged up to 26.4% from 26.2%.

• Accessories sales grew 52.4%, mainly from Speck; excluding Speck, accessories growth was 23.5%.

Outlook and guidance

• H2 EBITDA margin expected to be roughly flat YoY as Speck integration weighs on North America and advertising rises; EBITDA dollars expected to slightly exceed expectations.

• July and August trading was slightly ahead of expectations; management cited a strong start to H2. China growth was expected at mid- to high-teens in H2; July-August growth was reported near 25%.

• Advertising spend expected to return to ~6.5% of sales in H2, supporting American Tourister in Europe and brand launches.

• Management retained its ambition to double revenue over four to five years, supported by organic growth, acquisitions, non-travel categories, and Latin America expansion.

• E-commerce targeted at ~10% of revenue within three years; direct-to-consumer sales target ~one-third of revenue over four to five years.