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peter mu's avatar

Hi Alex, thanks for the update!

Just have one doubt on Samsonite's long-term profitability. I heard that the company raised price for most of its SKUs in late 2022 & early 2023 - to cope with inflation at that time. The average price hiked up 10-15% and respond to 80% of adjusted operating profit raise in 2023 as well as early 2024.

However, as global consumer demand staying low, Samsonite is losing market share to local brands in multiple areas (NA, EU, India, China), as showned in company's 3Q result (Global Air RPK goes up in 2024 while Samsonite sales record a decline, probably implying a negative market share shift under current price policy?).

I simply fear that Samsonite's current profibility is unsustainable. Eventually, the company will have to provide discounts to maintain market share and same store revenue, which will further result in a decline in profitability. And if that's true, company bottomline will suffer for the next 2-3 years as profitability normalize (and you are paying 15x PE 2025 at the moment).

I mean, if you look at historical data from 2011 to 2017 (18/19 is more about poor management), the average EBITDA/Adj. OP margin of this business is 16%/13% - only jumped to 20%/16% in 2023 and 17%/15% in 3Q24.

Do you have any solid evidence to show that current profibility level is normalized/ company has experienced a structural change resulting a 2-3% sustainable hike in OPM?

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Waits's avatar

Thanks for the update. I am a bit nervous also with the acquisitions topic in CakeBox. And not so sure about the expansion in France, they have pretty good bakeries there, but ok, I guess they will go for the low-level income people. Other than that, pretty solid results and let's see if they bring the buybacks soon!

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