Samsonite's new Singapore hub capitalizes on Asia growth as luggage sales recover
By Celine Chen
SINGAPORE, NNA - As sales have seen a turnaround recovery for Samsonite International S.A. this year, the global company strengthened its position in Asia's lifestyle bag market by setting up a brand development and sourcing hub in Singapore in June.
The move was part of restructuring at the world's best-known and largest travel luggage company to sharpen its long-term competitiveness.
CEO Kyle Gendreau said the Singapore hub will enhance the alignment of Samsonite's product development, brand management and supply chain operations across Asia.
In a media statement on August 18, Gendreau said, "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."
The company is principally engaged in the design, manufacture, sourcing and distribution of luggage, business and computer bags, outdoor and casual bags and travel accessories under well-known brand names like its namesake Samsonite, Tumi, American Tourister, Gregory, High Sierra, Kamiliant, ebags, Lipault, and Hartmann.
The Singapore center will design products closer to the Asia market, while continuing to lead the industry in product development, innovation and sustainability for key brands, such as Samsonite and American Tourister.
Samsonite will also leverage the Singapore location to manage sourcing for Asia and the Middle East, as well as North America and Latin America.
The other key organizational change at Samsonite was completing the sale of the Speck business in July for cash proceeds of $36 million as the company focused on growing core brands and boosting profitability in North America, Gendreau added.
He said the company was very encouraged by its overall performance in the first half of 2021, particularly the second quarter.
In the first half, Samsonite recorded net sales of $799.5 million, a drop of 3.2 percent from a year ago, and 54.6 percent below the pre-pandemic performance.
With China continuing to fuel the rebound, Asia sales contributed $307.8 million in H1 this year, up 3.8 percent.
Vaccination progress with higher demand for domestic travel in the United States, sustained improvement in the China market and Europe's re-emergence from lockdown accelerated sales markedly in June.
Compared to the corresponding months in 2019, June 2021 net sales were lower by 48.2 percent, considerably better than declines of 54.7 percent and 54.1 percent recorded respectively in May and April this year.
Also, net sales for the second quarter of 2021 were lower by 52.2 percent compared to the second quarter of 2019, a marked improvement from the 57.3 percent drop in first quarter of 2021 versus Q1 of 2019.
"This positive momentum has continued into July 2021, with the decline in net sales further narrowing to 40.9 percent when compared to July 2019," Gendreau reported.
Recovery in Asia temporarily slowed down in the second quarter due to a resurgence of COVID-19 infections and the delayed rollout of vaccination in countries like Japan and South Korea.
"While we recognize that challenges related to the COVID-19 pandemic persist, we remain confident in our progress and strong positive momentum," he said.
To cater to consumers in different economic situations, Samsonite adopted the flexible PayPal solution for payment in four instalments when it was launched last October.
The move paid off - customers using this payment option spent 25 percent more on average. From this October, PayPal will not charge any late payment fees for its buy now, pay later options.
Bolstered by approximately $1.2 billion in liquidity, Hong Kong-listed Samsonite is in a strong position to navigate the ongoing challenges from the pandemic, said Gendreau.
With COVID-19 reinforcing the importance of sustainability, Samsonite, which was founded in America more than a century ago, believes its commitment to the environment and innovation will help underpin long-term growth.
It has introduced the new Magnum Eco and Proxis suitcase lines under the Samsonite brand. Magnum Eco's outer shell is made with recycled polypropylene from post-consumer waste, while the durable Roxkin material used to make the Proxis shell is completely recyclable.
The company also launched the Tumi-McLaren luggage and travel collection, developed in partnership with McLaren, the luxury supercar maker and Formula 1 participant. Buoyant sales have exceeded expectations in all regions, reported Gendreau.
"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," he said.
The role of the Samsonite hub in Singapore is in line with the country's aspiration to be the prime location in Asia for companies to strengthen and scale their brands.
The city-state aims to start quarantine-free travel for vaccinated travelers in September when at least 80 percent of the population are fully vaccinated against the deadly COVID-19 virus.
Singapore, which holds the world's second most powerful passport after Japan, has eased travel restrictions with Germany, Brunei, Hong Kong and Macau with different conditions for each place. A 'vaccinated travel lane' for Germany starting on September 8 will extend to more countries with lower infection rates.
Globally, air passenger traffic continued to recover in May with the support of domestic travel, said the International Air Transport Association (IATA).
However, industry-wide revenue passenger-kilometers (RPKs) were 62.7 percent lower than pre-pandemic level as tight travel restrictions held back the revival of international travel.
The strength of the global economic recovery and rebound in bookings in June raised some optimism for summer recovery, said IATA.
"However, increased concerns about new COVID waves with the emergence of new variants put the expected rebound in travel in the second half of 2021 at risk," warned the association.
But the ability to rise up to the crisis last year has brought hope.
In IATA's report on August 3, director-general Willie Walsh said, "At the depth of the crisis in April 2020, 66 percent of the world’s commercial air transport fleet was grounded as governments closed borders or imposed strict quarantines. A million jobs disappeared. And industry losses for the year totaled $126 billion."
Recognizing aviation’s critical contributions, many governments provided financial lifelines and other forms of support.
"But it was the rapid actions by airlines and the commitment of our people that saw the airline industry through the most difficult year in its history,” said Walsh.