With global travel now all but shut down, luggage-retailing goliath Samsonite is facing unprecedented challenges, with net global sales plunging by 80 percent last month.
But its CEO Kyle Gendreau remains resolutely positive about its future fortunes when the impact of Covid-19 lessens.
The group recorded year-on-year net sales decreases of 8.2 percent, 14.9 percent, and 55 percent respectively in January, February, and March as all around the world airlines grounded fleets and countries closed their borders to contain the spread of the coronavirus. Then came April’s 80-per-cent fall.
The company has secured a US$600 million term loan this month, which it expects when added to its existing cash reserves of $1.2 billion, will help it ride out the “near-complete halt in travel and tourism worldwide,” said Gendreau.
“This substantial liquidity position, along with the aggressive cost-reduction initiatives as well as other actions to preserve cash that we have implemented and will continue to pursue, will provide us with sufficient capacity to navigate the current headwinds from the Covid-19 pandemic as well as a prolonged downturn,” said Gendreau.
“While our company-operated retail stores in certain markets in Asia and throughout Europe, North America and Latin America remain temporarily closed, daily activities have begun to slowly return to normal in some markets, most notably China, and we are hopeful that other markets will follow in the coming months.”
Samsonite sales globally decreased by US$230.8 million, or 26.1 percent year-on-year during the first three months of this calendar year, to US$601.2 million. Sales across Asia fell by 32.7 percent. But the impact worsened substantially in April, the first month of the group’s final reporting quarter.
While distribution costs fell along with falling sales, the company has been forced to lay off staff and is also seeking rent reductions from landlords.
“We have aggressively implemented cost-reduction initiatives across all regions and all levels of our business, including headcount reductions, salary reductions and furloughs, temporary and permanent store closures, elimination of discretionary spending, and significant reductions in capital expenditures and marketing spend,” he said.
“Historically, travel and tourism have recovered quickly from past downturns, and with people around the world placing a high value on life experiences, we are optimistic about the long-term growth prospects for travel and tourism and by extension the bags and luggage industry.
“We are confident Samsonite will emerge from the current challenges in a strong position to capitalize on future growth opportunities, as we continue our journey to become the most sustainable lifestyle bag and travel luggage company in the world.”