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Samsonite International S.A. Announces Results for the Six Months Ended June 30, 2021
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PR Newswire
HONG KONG, Aug. 18, 2021
HONG KONG, Aug. 18, 2021 /PRNewswire/ -- Samsonite International S.A. ("Samsonite" or "the Company", together with its consolidated subsidiaries, "the Group"; SEHK stock code: 1910), a leader in the global lifestyle bag industry and the world's best-known and largest travel luggage company, today announced its unaudited consolidated financial results for the six months ended June 30, 20211.
Overview
Commenting on the results, Mr. Kyle Gendreau, Chief Executive Officer, said, "We are very encouraged by Samsonite's performance in the first half of 2021, particularly during the second quarter. With the vaccination rollout and increased demand for domestic travel in the United States, sustained improvement in China and Europe's re-emergence from lockdown, the Group's net sales recovery noticeably accelerated during June 2021. Compared to the corresponding months in 2019, June 2021 net sales were lower by 48.2%2, a considerably better performance compared to the net sales declines of 54.7%2 and 54.1%2 recorded in May 2021 and April 2021, respectively. Overall, net sales for the second quarter of 2021 were lower by 52.2%2 compared to the second quarter of 2019, a marked improvement from the 57.3%2 decline in first quarter of 2021 versus the first quarter of 2019. This positive momentum has continued into July 2021, with the decline in net sales further narrowing to 40.9%2 when compared to July 2019."
"Additionally, the Group's gross margin improved from 48.7% in the first quarter of 2021 to 52.4% in the second quarter of 2021, with June 2021 gross margin coming in at 55.0%. More significantly, we recorded our fourth quarter of sequential improvement in Adjusted EBITDA3 to achieve positive Adjusted EBITDA3 of US$11.5 million for the second quarter of 2021, an important milestone on Samsonite's road to recovery. This represents an improvement of US$139.3 million from the Adjusted EBITDA3 loss of US$127.8 million recorded during the second quarter of 2020, and underscores our progress in achieving more than US$200.0 million in annualized run-rate fixed cost savings from our comprehensive cost reduction program implemented during 2020 and into 2021, as well as our continued focus on expense controls. While we recognize that challenges related to the COVID-19 pandemic persist, we remain confident in our progress and strong positive momentum."
For the six months ended June 30, 2021, Samsonite recorded net sales of US$799.5 million, a decrease of 3.2%2 compared to the first half of 2020, and 54.6%2 below the first half of 2019. The Group's first half 2021 gross margin increased by 140 basis points year-on-year to 50.8%. The Group continued to tightly control expenses in the first half of 2021, reducing marketing spend and non-marketing fixed operating expenses by US$15.8 million and US$88.9 million, respectively, compared to the first half of 2020, and by US$74.4 million and US$195.1 million, respectively, when compared to the first half of 2019. As a result, the Group recorded an Adjusted EBITDA3 loss of US$17.0 million for the six months ended June 30, 2021, an improvement of US$105.9 million from the Adjusted EBITDA3 loss of US$122.9 million for the first half of 2020.
In addition to the cost reductions implemented in 2020 and continued vigilance in controlling expenses, the Group maintained its focus on cash conservation, limiting capital expenditures and software purchases, as well as maintaining close control on working capital, particularly inventories. Together, these actions reduced the Group's total cash burn4 to (US$91.9) million during the first half of 2021, a significant improvement of US$197.0 million compared to total cash burn of (US$288.9) million during the first half of 2020. Samsonite had liquidity of US$1,185.0 million5 as of June 30, 2021, well above the US$500.0 million minimum liquidity currently required under the Company's credit agreement6.
Mr. Gendreau continued, "We took additional steps to enhance our financial flexibility, agreeing with our lenders to further amend the Company's credit agreement to secure additional relief under the Company's debt covenants through the first quarter of 20227, and refinancing the Company's 2020 Incremental Term Loan B Facility which reduced the interest rate that is currently payable by 175 basis points8,9. Furthermore, the Group prepaid a total of US$325.0 million principal of its indebtedness in June 202110 which, along with the interest rate reduction from the refinancing, will result in annualized cash interest savings of more than US$20.0 million. With approximately US$1.2 billion in liquidity, Samsonite is in a strong financial position to navigate the ongoing challenges from the COVID-19 pandemic."
Mr. Gendreau added, "We also made two organizational changes to improve our long-term competitive position. First, we established a brand development and sourcing hub in Singapore in June 2021 as part of a global restructuring initiative to enhance alignment of Samsonite's product development, brand management and supply chain operations across Asia. Our Asia regional leadership is in the process of relocating to Singapore to support the hub and manage Samsonite's business in the region. This hub will support the continued growth of the Asia region, an increasingly important part of our global business, while yielding long-term financial and operational benefits for the Company and our stakeholders as we continue to focus on enhancing efficiency. Second, we completed the sale of the Speck business in July 2021 for cash proceeds of US$36.0 million as we focus on growing our core brands and driving higher profitability in North America."
COVID-19 has reinforced the importance of sustainability in our interconnected world, and the Company believes that its commitment to sustainability and innovation will help strengthen Samsonite's long-term market position. The new Magnum Eco and Proxis suitcase lines under the Samsonite brand clearly reflect the Company's commitment to innovation and sustainability – Magnum Eco's outer shell is made from recycled polypropylene from post-consumer waste, while Roxkin, the material used to manufacture the Proxis shell, is completely recyclable. In addition, during the first half of 2021 the Company successfully launched the Tumi | McLaren luggage and travel collection. Developed in partnership with McLaren, the luxury supercar maker and Formula 1 team, the collection experienced strong demand and sell-through that exceeded expectations in all regions.
Mr. Gendreau continued, "Looking ahead, we intend to capitalize on the recovery in travel around the world, which has been driven mainly by the reopening of domestic travel in our key markets. The U.S. and China are seeing strong increases in domestic travel, while travel in Europe has begun to show strong signs of recovery as restrictions ease. The Group's net sales continued to recover going into the third quarter of 2021. Net sales for the month ended July 31, 2021, increased by 93.9%2 compared to July 2020, and were lower by 40.9%2 compared to July 2019. As travel continues to recover, we are well positioned to meet consumer demand with an amazing portfolio of new products, and we have begun to selectively increase our advertising spending to drive sales in markets where travel recovery is gaining momentum."
Mr. Gendreau concluded, "That said, COVID-19 continues to pose challenges with the recent resurgence of cases and slower vaccination rollout in important markets such as Japan and South Korea delaying a wider recovery. Moreover, our gross margin remains under pressure with the Generalized System of Preferences program in the U.S. still not yet renewed, and global freight and raw material costs rising. As such, we will continue to exercise caution in managing our business. We are focused on managing product cost increases and pricing to target restoring our gross margin to pre-COVID levels and will maintain discipline in controlling expenses, including capital expenditures and software investments, for the remainder of 2021. We are confident that our diverse geographic footprint, complementary brands, and commitment to sustainability and innovation will enable Samsonite to further enhance its industry leadership position."
Table 1: Key Financial Highlights for the Six Months Ended June 30, 2021
|
US$ millions, except per share data | Six months ended | Six months ended | Percentage 2021 vs. 2020 | Percentage 2021 vs. 2020 excl. foreign currency effects2 |
| Net sales | 799.5 | 802.3 | (0.4)% | (3.2)% |
| Operating loss11 | (86.4) | (1,062.9) | (91.9)% | (92.1)% |
| Operating loss excluding | (50.2) | (156.9) | (68.0)% | (69.3)% |
| Loss attributable to the equity | (142.5) | (974.0) | (85.4)% | (85.6)% |
| Adjusted Net Loss13 | (103.7) | (173.1) | (40.1)% | (41.4)% |
| Adjusted EBITDA3 | (17.0) | (122.9) | (86.2)% | (86.3)% |
| Adjusted EBITDA Margin14 | (2.1)% | (15.3)% | | |
| Basic and diluted loss per share | (0.099) | (0.680) | (85.4)% | (85.7)% |
| Adjusted basic and diluted loss – US$ per share | (0.072) | (0.121) | (40.2)% | (41.5)% |
The Group's performance for the six months ended June 30, 2021 is discussed in greater detail below.
Net Sales
For the six months ended June 30, 2021, the Group recorded net sales of US$799.5 million, a decrease of 3.2%2 compared to the first half of 2020, and 54.6%2 lower than the first half of 2019.
The Group's net sales continued to recover during the first half of 2021. After decreasing by 77.9%2 year-on-year during the second quarter of 2020, when most of the Group's markets were subject to government-mandated lockdowns, the year-on-year decline in the Group's net sales narrowed to 64.7%2 during the third quarter of 2020 and 58.1%2 during the fourth quarter of 2020 as governments began to relax social-distancing restrictions and markets around the world began to reopen. This positive trend continued into 2021, with the decline in the Group's net sales versus the comparable periods in 2019 narrowing to 57.3%2 during the first quarter of 2021, and further improving to a decrease of 52.2%2 during the second quarter of 2021. This improvement was driven by the vaccination rollout and increased demand for domestic travel in the United States, sustained improvement in China as well as Europe's re-emergence from lockdown, despite a resurgence in COVID-19 cases, continued government-mandated lockdowns and the delayed roll-out of vaccines, which slowed the pace of sales recovery in certain markets including India, Japan and Chile.
The Group's positive sales trend continued into the third quarter of 2021. Net sales for the month ended July 31, 2021, increased by 93.9%2 compared to July 2020, and lower by 40.9%2 compared to July 2019.
Net Sales Performance by Region
North America
For the six months ended June 30, 2021, the Group recorded net sales of US$323.8 million in North America, an increase of 0.7%2 year-on-year, and a decline of 50.6%2 compared to the first half of 2019.
The Group's net sales recovery in North America had been temporarily slowed by a resurgence in COVID-19 cases in early 2021, with the Group's first quarter of 2021 net sales coming in 57.9%2 lower than the first quarter of 2019. However, with the solid progress in vaccination rollout and increased demand for domestic travel in the United States, the recovery in North America noticeably accelerated during the second quarter of 2021, with the decline in the Group's net sales in the region narrowing to 44.3%2 when compared to the corresponding period in 2019.
The United States made solid progress with its vaccination rollout which led to relaxed social-distancing restrictions, reopening of markets and the rebound of domestic travel. As a result, net sales in the U.S. increased by 2.1% year-on-year during the six months ended June 30, 2021, while net sales in Canada decreased by 39.3%2 year-on-year during the first half of 2021 due to a slower rollout of vaccinations than the U.S. Compared to the six months ended June 30, 2019, first half 2021 net sales in the United States and Canada were lower by 49.4% and by 76.4%2, respectively.
The Group's net sales in North America continued to improve going into the third quarter of 2021, increasing by 111.2%2 year-on-year during the month ended July 31, 2021. Compared to July 2019, the decline in net sales further narrowed to 31.5%2 during July 2021.
Asia
For the six months ended June 30, 2021, the Group recorded net sales of US$307.8 million in Asia, an increase of 3.8%2 compared to the same period in 2020, and a decline of 53.1%2 compared to the first half of 2019.
The Group's net sales recovery in Asia temporarily slowed during the second quarter of 2021 due to a resurgence of COVID-19 cases and the delayed rollout of vaccines in certain markets, especially Japan and South Korea. Compared to the second quarter of 2019, the Group recorded a net sales decline of 56.0%2 in Asia during the second quarter of 2021. Prior to this, the Asia region experienced four consecutive quarters of improvement, with the decline in the Group's net sales in Asia steadily narrowing from a year-on-year decline of 75.6%2 in the second quarter of 2020, to a year-on-year decline of 63.4%2 in the third quarter of 2020, a year-on-year decline of 56.1%2 in the fourth quarter of 2020 and a 49.9%2 decline in the first quarter of 2021 compared to the first quarter of 2019.
China continued to drive the Group's net sales recovery in Asia. After decreasing by 60.7%2 year-on-year during the second quarter of 2020, the decline in the Group's net sales in China narrowed to a 47.9%2 year-on-year decline during the third quarter of 2020, a 33.7%2 year-on-year decline during the fourth quarter of 2020 and a 27.6%2 decline during the first quarter of 2021 when compared to the first quarter of 2019. Net sales in China continued to recover during the second quarter of 2021 with net sales 26.7%2 lower than the second quarter of 2019.
India experienced a strong recovery during the first quarter of 2021, with net sales just 0.6%2 lower than the first quarter of 2019. However, a sharp increase in new COVID-19 cases during the second quarter of 2021 interrupted the recovery, with the decline in net sales widening to 64.0%2 when compared to the second quarter of 2019. Net sales in India began to slowly recover in July 2021. We expect China and India to lead the net sales recovery in Asia in the second half of 2021.
For the six months ended June 30, 2021, the Group recorded year-on-year net sales increases of 52.1%2 in China, 41.7%2 in India and 35.9%2 in Hong Kong16. These net sales increases were partially offset by year-on-year net sales decreases of 26.6%2 in Japan, 22.5%2 in South Korea and 44.9%2 in Australia. The Group's main markets in Asia continued to report net sales declines during the first half of 2021 compared to the first half of 2019 including: Japan (-59.1%2), South Korea (-63.8%2), Hong Kong16 (-67.3%2), China (-27.1%2) and India (-38.1%2).
For the month ended July 31, 2021, the Group's net sales in Asia increased by 58.1%2 year-on-year. Compared to July 2019, the decline in net sales was 50.0%2 during July 2021.
Europe
For the six months ended June 30, 2021, the Group recorded net sales of US$131.2 million in Europe, a decrease of 21.3%2 compared to the same period in 2020, and a decline of 65.4%2 compared to the first half of 2019.
The Group's net sales recovery in Europe was interrupted by a resurgence in COVID-19 cases in late 2020 and early 2021, with the Group recording a year-on-year net sales decline of 67.1%2 during the fourth quarter of 2020, and a net sales decline of 70.9%2 during the first quarter of 2021 when compared to the first quarter of 2019. However, as travel restrictions began to ease in June 2021, the Group's net sales performance in Europe began to show signs of improvement during the second quarter of 2021, with the decline in the Group's net sales improving to 60.4%2 when compared to the corresponding period in 2019.
During the first half of 2021, the Group recorded year-on-year net sales decreases of 40.0%2 in Germany, 20.4%2 in Italy, 32.0%2 in France and 49.1%2 in the United Kingdom17. Compared to the first half of 2019, the Group recorded net sales decreases of 73.5%2 in Germany, 67.3%2 in Italy, 72.8%2 in France, 35.3%2 in Russia and 81.8%2 in the United Kingdom17 during the first half of 2021.
The Group's net sales in Europe continued to improve going into the third quarter of 2021, increasing by 106.5%2 year-on-year during the month ended July 31, 2021. Compared to July 2019, the decline in net sales narrowed to 43.6%2 during July 2021.
Latin America
For the six months ended June 30, 2021, the Group recorded net sales of US$36.1 million in Latin America, a decline of 11.1%2 year-on-year, and lower by 50.1%2 when compared to the first half of 2019.
After decreasing by 94.3%2 year-on-year during the second quarter of 2020, the decline in the Group's net sales in Latin America improved to a year-on-year decline of 74.2%2 during the third quarter of 2020, and a year-on-year decline of 43.2%2 during the fourth quarter of 2020. This recovery was interrupted by a resurgence in COVID-19 cases in early 2021, with the Group recording a net sales decline of 51.1%2 during the first quarter of 2021 and a net sales decline of 48.9%2 during the second quarter of 2021 when compared to the respective comparable periods in 2019.
For the six months ended June 30, 2021, net sales decreased by 19.8%2 in Chile and increased by 13.2%2 in Mexico, year-on-year. Compared to the first half of 2019, first half 2021 net sales in Chile and Mexico were lower by 47.0%2 and 60.9%2, respectively.
For the month ended July 31, 2021, the Group's net sales in Latin America increased by 253.5%2 year-on-year. Compared to July 2019, the decline in net sales narrowed to 26.5%2 during July 2021.
Table 2: Net Sales by Region
| Region18 | Six months ended June 30, 2021 US$ millions | Six months ended June 30, 2020 US$ millions | Percentage increase Werbung Mehr Nachrichten zur Samsonite International SA ADR Aktie kostenlos abonnieren
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