Release Date: March 13, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Samsonite Group SA (SMSEY, Financial) achieved a record EBITDA margin of 20.7% in Q4 2024, up 160 basis points from the previous year.
- The company reported strong cash flow generation, with $135 million of free cash flow in Q4 2024, an increase of $3 million from Q4 2023.
- Samsonite Group SA (SMSEY) maintained a robust gross margin of 60.2% in Q4 2024, up 30 basis points from the prior year.
- The company successfully opened 67 new stores in 2024, demonstrating strategic expansion across key regions.
- Samsonite Group SA (SMSEY) reduced its net debt to $1.1 billion by the end of 2024, while returning $308 million to shareholders through dividends and share repurchases.
Negative Points
- Net sales in Asia were down 6% in Q4 2024, with India experiencing a significant decline of 27%.
- North America sales were impacted by timing shifts and consumer sentiment, resulting in a 1.2% decline for the year.
- The American Tourister brand faced challenges, particularly in India, leading to a 6.9% decline in Q4 2024.
- Samsonite Group SA (SMSEY) anticipates Q1 2025 sales to be down low to mid-single digits due to macroeconomic uncertainties.
- The company experienced a slight decrease in adjusted EBITDA for the full year 2024, at $683 million compared to $709 million in 2023.
Q & A Highlights
Q: Can you provide more granularity on your Q1 expectations by region, and is India showing any improvement?
A: Europe is expected to remain steady with growth similar to Q4. Latin America also looks steady, despite a softer back-to-school season. Asia is showing an improving trend, with India expected to be slightly positive for Q1, a significant shift from last year's decline. China is also improving, with strong domestic travel. North America is seeing a negative trend, partly due to timing shifts, but overall, we expect Q1 to be down low to mid-single digits on a constant currency basis. - Kyle Gendreau, CEO
Q: The marketing spend ratio was lower than expected in Q4. Is this a timing issue or a scale advantage, and what is the outlook for this year?
A: The lower marketing spend in Q4 was partly due to timing. Our target for marketing spend is around 6.5% of net sales. We ended last year at 6.3% and expect to maintain around 6.5% for this year. - Kyle Gendreau, CEO
Q: Can you provide more details on your store expansion plans by region and the guidance for the full year?
A: We plan to open 60 to 70 stores this year, focusing on strategic locations, particularly for Tumi in Europe and Asia. We are not providing full-year guidance due to macroeconomic uncertainties but expect an improving trend throughout the year. - Reza Taleghani, CFO
Q: What are the main growth drivers you can control amid macro uncertainties, and how do you prioritize capital allocation?
A: Key growth drivers include strong travel trends, product innovation, e-commerce growth, and market penetration, particularly in Latin America and China. For capital allocation, we focus on maintaining a balance between debt repayment, dividends, and share buybacks, while continuing to invest in growth. - Kyle Gendreau, CEO
Q: With strong free cash flow, what is your preference for capital allocation between buybacks, dividends, and debt repayment?
A: We aim to balance between deleveraging, investing in the business, and returning cash to shareholders through dividends and buybacks. Our strong cash flow allows us to pursue all these avenues effectively. - Reza Taleghani, CFO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
