SMSOF - Earnings call transcript Q1 2022 | Samsonite International S.A.

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Operator

Good morning, good afternoon and good evening, ladies and gentlemen. Welcome to the Samsonite International 2022 First Quarter Results Conference Call. Please note that this event is being recorded. I would now like to hand the conference over to Mr. William Yue, Director of Investor Relations. you. Thank sir. ahead, go Please

William Yue

CFO, you remarks. very evening, call. good good with and Good we Mr. us. Gendreau, will you. much, This is operator. begin our Gendreau everyone. Kyle earning few our morning, Taleghani Samsonite's with have And opening afternoon, a CEO, Thank Reza Thank first Today, quarter

Kyle Gendreau

Thanks, Thanks, Great. William. everyone for joining us.

and Despite In into Page X to versus deck. down our in sales up particularly recovery the announcement in up QX improved despite of and And continued particularly from some continues. so know, impacts clearly that. XXXX. and COVID results beginning certain all on in strong our am reinstatement Asia and we Omicron down at travel has I first QX, of still XXXX, So markets had sales quarter XX% of profitability trend some showed and were recovering world, restrictions cases, of QX, our XX.X% rising in of that's China, as the the we where quarter

continue all improve. seeing replenishment trend can North that. some continue despite QX. that had a and continues trend but delays to are getting cover inventory to QX, have America impact we that saw We very But in And is We we to that, some better April. into that good

were for scale XX% down compared excluding suspended down numbers have April QX XX%. we Our which Russia, to

we trend an see as So the improving to into we quarter. continue step

we start a have May. a really We for to caused zero impact has we into into and COVID April are step the second seeing some China’s bit are quarter to and from impacts as that China China improve seeing meaningful policy

now X%. representing margin that $XX our really more compared was improved we've margin. profitability strong about But to million continue XX.X%. EBITDA Our calls negative and And importantly, down it's and year-ago actions to in positive, That's adjusted all EBITDA or XXX a talked up points an a very basis EBITDA cost QX, on the to of initiatives a deliver several XXXX result margins. QX of of EBITDA

strong quarter, what's will first would, looking said continues position the QX that and expect primarily inventory set and continue working as we travel to During season for and business for capital, be we we into invested are for inventory and in the year. a the as we of our half the we bringing summer you'd be recovery second as quarter up well the will in

of strong end strong our deleverage. profitability $XXX Given still cash very quarter. of meaningful as release with at flow lined us today and but had ESG up billion year, and approximately our then we the with of our end the last on the of quarter, in And remember, the earnings ESG million cash $X.X flow further our debt we leaving at of you repaid report. we release the liquidity of and this focus We our

And very so well. say morning And a would this we continue as published strong I we that focus.

at look excited a I I recommend published XXXX report, said progress our today. really making. are are you the about we highly We ESG take as

gives it progress in the sustainability. on wonderful a think I the leading picture we industry are having of

circled X% from trend at as a the our ago. in negative we so the the for improving quarter, this a margin, a XX% next was the really think and I I EBITDA said, to that's If sales. it think page, measure and you And earlier, bottom. best importantly, on on But I quarter compared year-ago. as and when said as our have XX.X% I versus deck recovery as far look the sales the go XXXX at net to year that's increased I But

EBITDA margins. the can at pre-COVID journey are we You against historic look

we and period. are XXXX, So we’re that's $XXX lower I that sales still with XX.X% in at QX million time year, XX.X%, mean, of than last

continue margin to this recovery EBITDA the by give sales across last sense, you same over QX come some out are and expect I we year, you inventory we've to a should very seeing moving about in sell wanted to for as think see you of with nicely. our that's down can you. but in, bottom, XX% So recovering continues pre-COVID was QX slide the improve North delays. all at here, shared it notes the And region. of Page we very And past And levels, to the page are the will regions X, America, on we as comfortable. what

missed So think $XX our container North around delays shipping largely we America inventory around in million. we – sales QX in of

our for that, XX% QX. So be adjusted for XX% versus had if down America approximately North QX would I down

So trend numbers quarter the for full just to again, QX our XX% scale, it's continuing looking for range like improving America. North for down be is going the in

in America. challenges the with COVID, North of with are trend trend the seeing in continuing In some So even we to continues Asia, China a really improvement. zero improve of

seeing to because having give the team China on in heads opening. week sense the for XX% to you down last challenges only But in all U.S. see was pressures ability Singapore we Asia looking back. quarantining were person into QX travel to of on several slide that and a week reality Asian the is in Asia and way And like of we open be all the with our our deck. you some Asia. and the around I is we couldn't move XX.X%, of from down bit – a and markets last are to of So our around team country up. a that QX can have are Singapore clearly QX I in seeing including China there

to own get know travel started see really we our in are as And our freely. is Asia in fairly business, to that The trend we last QX own around So we year, and from just continues. can We the rapidly year, starting – really starting see of trend last it we as as move can continues lives, move. Europe to Asia as Europe's well. trend to

down XX% can versus is and numbers for teen, see for XX% are it of XX%, Europe. QX QX into You QX XX% in looks the now our QX, what like so down down were as

strong anticipating a despite to positive, last at continuing are summer end season. Latin Russia, year, really what recovering we is then Europe So the which very trend, And of and and what seeing really America, of strongly positive. be are in travel strong moving is very we continues Rest the nicely, a

strong very a very with a back-to-school season. saw we successful QX So

the to So up up teen. XX% XX%, QX in is

Latin continues to the dramatic really for America. needle, QX profile well and So on sales, not move Latin profit only into America it continued as but improvements

of So before. we move our we from recovery this are are perspective. I across regions X, seeing progress quite the happy all a to showed next slide page, sales with the we Page

can is travel. line you the red domestic So see

by recovery can January, And to back travel. of travel recovery a than kind is rest us. travels moved which of kind had if where really are see but international see you XX% rest to moment stutter domestic continues that territory which and in the normal. will strongly in And can within markets are really will the really and line, moving this year of think region the to we is are a other I out numbers And I And step this You trend North the coming within fuel international that for to that well, for good it I what the into is for see where which the blue much picture still of down America was year move. bit, of play you Asia of half Many travel. the next really as page, markets recovery positive the the improve a lagging Omicron that's Europe, of go very continues with saying. month and gives the this every domestic think

So you North this revenue miles can or from recovery Latin America, kilometers. and passenger America is perspective, a leading see

then into move the see indefinitely page, of but on more then to its next Europe Asia color start and all, strong at can trend seeing. the And bottom this trend last of suspect APAC the half And moving – or but the on Pac year continuing not and the quite but do pace, I from little really year. in even same see a to about are China, really really improving, you'll You QX. back the we Asia into what than middle

easing So many restrictions countries quickly. in been really quite lifting have Asia and travel

in, it seeing very together across were was last get We're to around. very easy and easy get was So Asia. you really trends teams able again, terrific. to it very drinks, And and to for move week, dinners in are similar we Singapore

are XXXX above and is levels. South is is full starting restrictions. even We're on. and Our Korea India India our to opening, seeing up business Japan ease Thailand opening Australia business

as QX historically biggest for will So be fuel zero which following that Asia the into market sure we is recovery policy. a a move COVID strong, very the and China, in into backpack continues our to year. the of region for continued

for into rest China, can Asia And movements May, look really see XXs all regions. at starting see the XXs. April in if exclude if seeing China, recovery we've what all to starting behind, months upper I been it's and down we to And of to of kind the last the But that down other are in so mid several it's get lag real versus as know, for travel you're specifically recovery causing we you I and for in delaying Asia. and we Asia, of to think,

starting we starting strongly. travel And restrictions, really very and as think will other so get have region this to that quickly suspect I trend are And move really I said. to moving and and that do continue relaxing governments

gross the quickly, what continuation a call. to about we moving last this so So talked of on just is margin just

So we very be margin continue gross to well. managing

not in had gross year. margin So QX last where XX.X% but that's versus a renewed QX place. XXXX, had in of XX.X% than we we GSP a in And we lower of with were GSP little XXXX, yet. That's

with and make I the and we it our really continue that the take and will back second gross gross continue price vendors and effectively for and the promotion move general manage deliver but policy focused historic despite some our I in levels, GSP margin. just we this that, our the renewal margins half continue of U.S. suppliers time, be So continue margins our of to And we back working quarter contracts to shipping on all to able the positioning closely, to we costs time, discount into this increases on the despite watch has taking to and shipping That in year. suspect in been think and sure laser team and maintaining to will inflation, as

well. really I and we've that ESG really sixth for the our really with me, launched, XXXX, talk accomplishments and then some happy it And annual teams have I'm done priorities manage or to sharing So our achieved that mentioned really journey next hand phase our about published to Reza. I lastly, everything of starting our report, we responsible of for to before we ESG. journey, in

some bag an tremendously successful highlights, these the We Here's most recycled some doubled XXXX. products of is This way. recycled We since Eco. our along launch, of about material really talked product. we've waste sustainable, Magnum amazing fully our and share with launched post-consumer

of to board. a in number adding really that So recycled products content increase are we the the across dramatic

regional continue to a come panels in very really our up We've Global of with set a progress very the hired to expand a inclusion solar We develop with here new are are strategy, the to and I'm is amount seeing of we me diversity more We committees, moving customized we And of [indiscernible]. reporting needle meaningful facilities. Head renewable our and many as generating D&I plans there's energy committees, of that. regional who Sustainability, happy with head on there. directly

in starting him as looking develop the talk to that happy product. focused Gregory, when strategy, across starting circular the and the to that We amazing on with very whole priorities next work really understanding sustainability all European ESG XXXX really team, And started product ESG, we'll are for we we our I'm work about report, ahead, our move our direction read aspects we some doing taken company of economy, stages that's our we and here. have ESG can really our about on we're be in into journey. You with of

measurement that measuring are and X in our Scope the business. the starting gas emissions, greenhouse really have We expand to we

And from business We assessment, a then cross-functional evaluating governance business climate might really business our the targeting is to our are risks quite [indiscernible] And which really, face. – us really we risk for overseeing and that sustainability what establish has teams within conducting our entire making our really excited. continue all ESG. get it organization really moved a and and sponsoring a and we're to really that perspective, of allowing to our are running. climate sure strength comprehensive And of a piece and embrace it's this I'm global committee, embrace against big are

wonderful I there. ask look a we're everybody progress a report. the do look It's So making to at take that into

that, turn with I'll to at then back So I'll and it end. Reza right the come

Reza Taleghani

you, Kyle. Thank

So on recap Page to we the are results. XX, just QX

that proud margin are very that adjusted well. EBITDA EBITDA at XXXX levels, exceeds levels that almost year-over-year reporting is is net quarters as on over margin with approaching again, had XX% of adjusted the increase improvement net very million and as $XXX a XX.X% EBITDA, percent adjusted currency the on $XX Gross XXXX, are million prior we a the at basis income well. million, the a improvement profitability so we So XX.X% a with XX.X%, line with XXXX then reported and prior of again, approaching basis, Adjusted sales that fact is we've $XXX of year. percentage strong margin of in reporting the constant over XXXX

So we million XXXX, line which in percentage $XX and net of income, X.X%. much which million $XX of is are at with of was income adjusted net adjusted a very reporting

before the I'll in bit to through little detail. William, on go financial the Going greater highlights some page, next a just of digging

QX the by as relates over renewed of $XXX $XXX headwind some of over gross last QX to despite million, EBITDA GSP year both prior to that the U.S. QX year, $XXX that in pressures, $XX that basis of Kyle having to of loss XX.X%. inflationary about we EBITDA talked year the million, this million XX.X% the in in Adjusted adjusted positive from territory increased and we've the brings from increased mentioned not margin sales XXX a net point just it but been still fact million So $XX have flipping and by to million margin also improvement XXXX, of

page. fixed were EBITDA of SG&A lower Going quarter is that what's for to on next of the million driving benefit expenses than adjusted $XX XXXX. Part QX the

– that is a rebound, come $XXX well variable run we've of XX the other ahead of if SG&A that cost by X. about As rate Over we may calls, time, many SG&A there of some and are on benefit you on recall, obviously benefit obviously overall these as of sales into remainder margins. future, over of we've through to that had, talking been the helping to year but running you that, million plan having simply this due are reductions were some SG&A that the which benefit in numbers we and maintaining our multiply

$XX in million investing advertising to are million. $XX increased We again, by spend advertising

further year. quarters increasing pass for percentage terms of remainder be sales, this to in the as still Although that of work X.X% the at more there of done is the

And is plan billion position. debt have that and balance monitor levels repayments overall about made some just interest a remainder net-net $X $XXX impacting If comprised of bringing debt made on well. us that on voluntary million that Loan down the The ever the of revolving feel that that accrue more as the But permanent continues, Kyle the did $XXX strong $XX cash that. continue The and cash We as profitability debt as some our of of commitment very on for Loan have $X and as to on business liquidity and savings the that our did, still position, is was delevering liquidity. we stability about our reductions confident and will million to recovery over can plan we thus voluntary strong an of of repayment sheet. approximately of again, overall March billion of debt facility, our business. Term we borrow XX, the we year. further $X.X of equivalents B. on we million credit debt our the Our goes of continuing mentioned, where also year as not our Term million to million we repayment we as net the our we do there's need We to the we of feel A $XX

position. have As levels was I the the on build ability year, that on stock some in been the capital our $XX next very, trying million driving and quarters as was of XX, burn increased try all keep in to we the be really mentioned get the finally our rebuild plan Thus very we cash to was of billion, to $XX towards approximately very that million inventory on by we end calls page to over million, our Slide We eye a $X.X our $X the $XXX CapEx disciplined. to and doing working well. inventory cash to million as we've which that burn disciplined net just as on in significant subsequent prior what liquidity quarter, said whopping a to the of was and continue quarter actively compared

$XXX.X America on $XXX.X million sales this through million, all at so relatively I'll Overall Kyle million, on Asia to go higher $XX.X million. touched XX. $XXX.X quickly. and regions, Moving Europe has this, at across North Page Latin America at

other recover, will well but for country have we some and that other more by to said in you we constant and than China to well on in we of as starting performing effect, impacted see And done us. Asia April obviously still very currency are a all basis that work other every very China. see As that every that shutdown can region hope be But the regions specifically performing May.

XX. a Kyle, Slide and point greater again, bit to margin mentioned even so improvement material EBITDA from just of improvement QX earlier, repeating our of QX XXXX. that the Moving adjusted XXXX, And little to really this and compared

So and you the in of QX, our is in adjusted margin many the is XX.X%. business, EBITDA has see as typically some seasonality aware Obviously, there would it. you are than margin increased lower

QX, to strong I aggressive, a a feel stands also quarter-over-quarter very good on think taken but quarter. margin we've due where margin the profile a SG&A, our For largely that we at on about basis, year-end instance, the actions gross fact at very maintaining but in

XX, all across Moving to growth channels. Slide is

channel into the as to So opened seeing. year meaningfully restrictions most as we has COVID an bench regions. There's as in travel up this in move the we've category there's start been travel that subside DTC the acceleration

been Kyle of performing some if have looking we for have. Tourister, still very relates at non-travel, appropriate been note, really as travel point So Tumi I of it's mentioned one to you're overall, to North chain brand, terms mention, a there Tumi that that and product Samsonite SKUs the lot has and for American performing which issues it but America, in what individual the think are well supply

numbers better we even get these were could even more have So inventory to in. able been if probably

next to something really Moving we the the of. very slide, on are SG&A proud very, story remains that

openings course that across cost that of couple continuing last retaining discipline are includes years. our of the store SG&A includes all headcount, maintaining savings to that and maintain over implemented We the were of lines the

on of the fixed that's SG&A So in savings, line. $XX just million fixed terms

anticipate $XXX.X QX because XXXX, this SG&A as we XXXX. savings natural of either negotiated or million been that's quarter. to There year roll reduced a have that the rolling some rent next into savings we these looking going fixed the we temporary subsidies as million staying QX But are if things us had that has with $XXX have savings is And slight we to increase we with landlords. fixed future SG&A would government in temporary at we of and off, do compared well. into had So that that

savings impact that. Moving really the just look of a what the and bridge, of to just Slide SG&A to progression at XX,

are to an $X.X are FX was you we are gross XXXX XXXX looking today, at the XXXX, on from is aggressive standpoint, EBITDA, if difference of is in $XX.X between the region recovered really EBITDA but if at covered our you Obviously QX to sales. and profit amount it all the levels. XXs, hover largest anywhere there adjusted have lower of million, So at then of some on what adjusted Still, from compared some year-over-year, we I'm block margin if million impact depending million. were depending that sales countries lower looking looking SG&A. is some the And XXXX are that of slight we not the decrease we than of that Asia $XX.X where there decrease to versus where there. profit from gross actions more mid-XXs But by on

some So obviously there's SG&A. with lower sales, variable lower

that. million the from pickup on are benefit largest which savings, is So permanent million decreased it fixed of $XX.X fixed there's component million. as some that so really SG&A a $XX.X But coming of $XX.X as SG&A, of advertising reductions, well

to again, further base on as in, fixed would again, from million. EBITDA comes that are time, the going one see that as our were really we well. it anticipate to more hammer margin, margin, to each get the be as And we all XX.X% where of margin improving and starting sales of us covering I'm dollar cost really on $XX.X $XX.X to point So are million walk the from we we which

year, issues the earnings this were quarter the some and last burn this at cash to we of stock in. chain of supply inventory we over Looking forecasting we Page $XX saying every been stock calls on managed hoping be subsided, of we have the this to the able that quarter, million, XX, and would our obviously get many some build

so absolutely to many level of us. we little a all those we some on cash, we inventory. as healthy warehouses finally build including if bit, we our anticipate as as uses that were do missing of is forecast, able we some be we looking remain It's to Again, stocks burn burn anticipated something But disciplined are QX we get for CapEx. that won't of at of So again, having and try sales. on cash this we and cash do full QX,

little is Moving by after to primary really $X.X a that back March, of $X.X debt. if decreased a voluntary we bit this looking here And note, how more increased. actually a $XXX million in at of million, we the look million. of a million for approximately $X.X of our the of decreased repayment I were of year, calculation debt did we we debt ample much approximately had June of that continues at here and will from debt of than XXXX, liquidity actually balance sheet December have is story us Basically still point on June added liquidity March had balance last XXXX, of sheet, did. billion of Slide XXXX. we've by of we Net sitting XX, we $XXX billion. We debt just $XXX

point well. as days to of the continues are the here Really from net inventory. we're days, is at be net of compared is higher just pay So really of go our again, as and days $XXX up debt at about December XX million only position delever precise, of to were months than down is debt million where XXXX, the were. are in as net-net working or back terms to XXX. And XX XX, working inventory we continuing year capital, on that to XX. capital days, XXX And to we Page if we And $XXX.X we inventory

inventory to $XXX are So million done still here. million, we to December, as be had up $XXX there of we December, in more compared work to is

get March In trying stocks terms levels. of inventory up, of we are XXXX below still to inventory

to to some of starting you CapEx that's to levels, very, the $X.X as So CapEx cash CapEx software. inventory that cash able disciplined, quarters those use quickly $X as very going on on we just of keep replenish $X.X million to see be to be plus are in And million some total on need harping of where stocks. basically happening on build CapEx, to burn the

go very as into we'll get year, the continues disciplined, normalized the to course As CapEx. next still especially are and more term. start But in the on year operating of being shorter levels to we we

that, at to outlook, So Kyle with again Q&A. we turn some talk can for over I'll it then and

Kyle Gendreau

Reza. Okay. Thanks,

So I where think you for get we a sense are. good

our year from talked well our margins, really operating said, in at recovery, sure, end share you and positioned And grow laser we've are to has focused margins last operating market continue we think dollar financial continued. every And For momentum and fundamentally see as sales into next higher so the QX margin I we're it. the a results improving. are as Reza as of should improving about, really and to on come that

manage for and the to higher as the of the We managing And discounting we've suppliers. are the costs. on been, working our which very we've able cost margins focused, with leaders are knows code, this pace said everybody gross with in its as our as to tremendous this able is closely inflation be against but the promotion, costs to it's tremendously important. through market margins market been pricing, is reduced and pressure, is backdrop product and our than really globally zip freight historical where of maintain And setting

and As numbers our monitor that talked Russia but ahead, we our call, last continue actions effect we had closely be see further little that, QX, to we in up in business start will the show we the from mid-March, as take ready you'll very in and will suspended necessary. QX, to situation start on to to

particularly as really within those that move are well. into China business, Asia, in from and So revenues, has that the numbers we COVID to QX. China as we closely, start carried our policy, of not seeing effect that QX but we a see you'll pressures into From monitoring are clearly

months entire happened in of kind lowest April. improving May, still the but of significantly one probably pandemic So for has recovery the down. China It's in of during

are ready said. as much way. to in able of I'm we've agents teams that So to we are really can't as rest And starting move I nicely what easier a the achieving optimistic with and we to despite and wait I that are the And is do as well. to now back Asia highly go visit travel think

So marketing intend in moving page, XXXX. investments next our we to in increase to the

managing it closely. we've So been very

we X.X% QX that. around I for are We year-to-date and about think, are running

will expect that the should year. up of You back half that in come the

are see with as covered, SG&A. and that on side, achieve on start we the been to as we brands. capture supported to move And proud really recovery, our we Reza well up closely all managing closer – continue SG&A we particularly As historic the to really we can teams capture the able really all with we'll focused demand this. levels, to of And this recovery to are back here can are we've capture fixed what very –

in We investments make and to or in classic, will strategic initiatives functions. some store core in start select

we are still being expect savings run that deliver rate us the making evaluating carefully but and to able that times. So we've to fixed many on about where talked them, make you'd investments

back really And few need was inventory but into to more is we were able end issues will of capital. ourselves good concerted we our on moving and allow we really here as really of well. are on navigating It's on really inventory get to get We it back to a It which it accelerating. getting bringing made of inventory month as now of teams will really a being QX, we well. our ready just that's to continuing each it. us year QX are us was selling to, are take stronger of the We've because not position. working at in, for get into to This we seeing rest where capitalize really are in, get months effort together. recovery clearly to as all clearly Part recovery recovery front last well, this the the into but the is bringing the function we a are coming and

around in largely together We are the work for flexibility working our world, some teams.

getting long-term I And excited, teams. as the one financial of maybe of the our and company, see get to think and along to to not And moving we world brands, in levels amazing next And pieces strengths said, the everybody be team strength really this our well. are energy, is in in the to the one then we strong the a of a gets and as position as on around continue pre-COVID continue Europe gain do sustainability. terrific position. here of focus quite our week balance that of lastly, getting to sheet travel. together, are share we I'm in the I with real really think the of energy our back you market really Reza getting results teams world I'm drive

We are de-leveraging.

have liquidity. meaningful We of amount a

to We and get territory to push and into with seeing of really well of half to end at year. are that here ready you've very forward the the we very, year back in start what are this the positive the business of the drive positioned and the been recovery

we So the are quite business. where in with I excited am

are that, it William, with we take would be So happy to great. few questions, the

William Yue

Reza are and for Q&A. you, now Operator, your Thank Kyle we remarks. Thank you. open for

Operator

ahead. and Thank you. Instructions] [Operator Ladies our questions. with Please comes Stanley. Dustin Thank gentlemen, And question first are you. for we go Morgan from Wei open now

Dustin Wei

my taking for questions. lot Thanks a

talk of first So management the like all, clarify of some we'd numbers that about. to

Asia, XX% basis to number were China? also in on that number So And that I excluding Is the the of like want sales? excluding XX% XX%, basis excluding the we of also April down down talk And like and to second for down on the is like terms basis Speck Russia quarter, similarly that So excluding Kyle, Russia mentioned think some about? that is in on sales? mid-XX%. of about to the the - on about likely XX% just clarify like of down Europe

Kyle Gendreau

Yes.

so. I the And the our really the the XX%, scheme of into are you excluding were just as the a number is running it's Speck numbers I Russia if in would gave, not in think overall grand that for thing, aren't business, true because or step showing and business to kind for the a same for So really down of in it's but really high-XXs, we that stepping so kind for what our was Asian large before And growth. down is indicating Asia taking XX% a QX, give not I point China, XX%, sense Russia, And we be XX%. and the out. we we're of underlying excluding for China Europe, XX% the Russia. then those

recovery seeing meaningful we're So rest of the in Asia.

Asia verbally you, really out the it's number get because total once of Asia Asian those sales a code. the so why in get important And that's into And there, get you for zip catches effect to cost of China, of of really that as off the structures. see up, you so called really get leverage can China additional I And moving. for that rest the you you'll sense rest

of region. improvement pretty the Asia You'll as profitability for see get we to rapid into zip start codes rest same the the a as continuing in

to So those excluding just clarifications and give for on those are yes, Dustin, a that. you sense right you're we

Dustin Wei

Yes.

course. helpful. Of That's super

as sort you side sense, side, from perspective, date. the like, little of that, lot that trend a And the sales the not see first the business sure big global disruption how you that demand is your that China second not the your to to to the China for what of a other side if and does and supplier sense as more both So update and about you're supply or is provide in actually able to in in how market a that quarter well compared quarter impact the supply markets, a of in impact? on could for talk lot domestic

Kyle Gendreau

Yes.

watching everybody is think I right. closely, that

for So around a just China, of trend was most a recovery part from XX%, for perspective the in right. China, range

was we as lockdowns, move XX% to for China deep a And the in down function down was seen a It to the with no even to people everything we up It's closed, that's move almost XX% expectation April. into closed. XX% XX%, real we've during April, around leading XX% running dramatic orders reduction of us were China blend move, is down so country. China that across there probably really Shanghai, the will say way let's purely looking XX%. in and but the pandemic pretty had get then went stores the the e-com The sales for in So was months But since like to most easier. the lockdown. May, closed, because in into was shipping July, entire was issues the somewhere and for particularly the June really within lockdowns distribution that

QX. required there, when what we And the clearly QX think think and got to continue June. of quarantining to the see lockdowns story to of we in we're of down so it inability levels no I a China, people ease why of demand. sell, be has long to get April out travel the in is it It's out international months, be had into suspect for think to a starts sure. as story physical of see performing moving get and and ease travel that policy the China doesn't real an China had out pre China. zone And prohibitive up, for is a think as I And But few they will for I moving. But I will much our just win will seen got which to a traveling clearly zero starts mean QX, despite come we'll you'll challenging. really I demand business think we'll it COVID but it because seeing into we until China, very And international improved that as to and that for that's and the side back of real move And get take improving isn't the things start up. to road other that

Dustin Wei

Thank you much. so

So so is like April the XX% April, month down you before XX%? to like to it and about recovery clarify, of rate said, right, XX%

Kyle Gendreau

close. think we then But Yes.

in looking at. think I you're it any see can you business

we still e-commerce, with pros we're but free that's to But physically able just as being out month continue Of we're starting a course because I the QX. ship pandemic distribution – China flip of had to starting into got the to if worst closed, will bit, think on into and getting literally but it and you centers June blip, figure ship for a up to how May April. decent worst demand for sure entire for and into was the chart,

Dustin Wei

please. supply from So side the sure, is. Yes,

Reza Taleghani

Yes. just one add I to want more.

Kyle Gendreau

Yes. Go ahead, Reza.

Reza Taleghani

on talking down when say cost you are be that the just I XX%. Dustin, should it's just Yes. to we're the that in business, that still EBITDA aware margins delivering close want are sales of the mid-XXs just in given to structure China,

the that for as progresses makes April, sales, quarter has So huge sales rebound we're talking whatever that, but be sales, been there you in market well, a when in as that down side expect that well. know, you're that a But on aware XX% difference. as of just do the we reset the to or EBITDA as obviously

Kyle… Sorry,

Kyle Gendreau

Yes.

some we're seeing Now of now. the rebound

Dustin, supply closely. So side, watching very China on the we're

move move And think I supply suppliers really buy little these restrictions is materials raw five and blip as in probably in the free weeks. things or and of there a throughout be components many a clearly our chain a four inability causing blip around the materials. China of will you because to around bit

able continue. they're So to

on orders being that hand Our our amount along finished the significant And are to in to our of with orders, that suppliers with produced. continue a we good are suppliers locations, have move. way of most

QX. is that So there ripple what Dustin a carries we're really into watching

a delay watching we I everybody's in But to position. that will raw within of think QX materials think in are some inventory China. components ordering some producers goods – little China finished I be those ripple fine. and it's get because does of outside kind because slight broader And And lean much used our forward ourselves will on being of we well. as so the cause on

I able blip, be fairly is think there well. if navigate we'll that a to

this. five market that's as of been problem you're just to months order, the well a probably up showing last ahead we've you for know, to If

for it, okay. Tier And X able, but they so were and that with with we and lockdowns, in moving not maybe many a working they it. sense we're of navigate kept And because our even our I suppliers were very suppliers And a and closely our get employees Tier finished to think will keep to operating continue bubble goods capacity, produce. full suppliers at could X they

So we'll fine, it closely. watching but I we're think be

Dustin Wei

Thank two you so questions. much. last I just have

in missed of quarter business become scale, kind supply of your of mentioned inventory global million like that actually on on side, America other end that. North you the also sales $XX first So just see we chain, the the But level business, higher. on because the your

year, about XXXX what's we for fourth to XX% month of lot I you will the order underground overall may you the we I lot it in also a increase but deliver can very of in be products, you complicated necessary the the you So on you to of to last but ahead, products sort if the assumption kind products, already sort the start the significantly have half supply what's about think, like the lastly, price what shipment. much. cost presentation, mentioned and is products and now the a to inflation talk second is Thank price do timely need that and of XX XX, And FOB talk looks the if chain expect for increase, quarter this inflation of or mentioned of order like guys more you you call of to like that year you kind disruption XXXX? continue have And in the GP this behind. improved the that the margin make

Kyle Gendreau

not Okay. because the I'm pricing What evaluating. understand is and everybody's you should for to the we are FOB maintaining FOB margins. on laser FOB that going answer focused our

we that I to kit think in able do tools need our that. we'll whatever So be do to that,

at it leave might I that. so And

that should You producing and constantly also engineering products. remember we're just

what that in at XXXX got the and are that. of coming in end have factored XXXX for products So we've targeted already

not we it's but necessarily we will a that want. it's margin the So that delivering deliver increase, be price product that will

that's how that I scale well our think do we're think with positioned Dustin that. So I manage to and we'll

get isn't have we're increasing, that been that saw not is, around million the far have to really the hand. bringing us reality sheer view miss, which or get might oversimplified capture for $XX a shipping it's to that was in, shipping that into and come really America, we that recovery. a goods certain that's a to but you on inventory because, in As customers very capacity what we're amount comment certain The able that products not just delayed in on to is North inventory's as to container

does delays of getting having the customers, they're will U.S. same as So hands challenges the take it particularly directly the in with timing and in more many it has because just the capacity. our enough And of factory. to container do goods from getting right in shipping orders

the a the every Not that really freely, better. here, it's an month more if are that. anything, issue getting in trucking it's moving function So shipping U.S. arrives ports we're of moving having it freely, when is more

really it's just issue, which of around the not that's timing so And improve. the of all delays will containers,

some issues. say had capacity I Now, would Tumi

super just in and So production of challenges, strong the shipping but because improved. only the Tumi’s is recovery capacity some U.S. not it's have do we

saw, last of was improving end it you at year. As dramatically the

So our actual speed suppliers are moving full deliver to to us.

catch But starting than And so has shipping. now. more a even that's little up bit to just that

about levels, April get that's Tumi our up, might feeling excited fact actually to the in is improve up well. the So behind of sure much as May, where very – and as into it markets we're have think XXXX continue next months. few Tumi so been the we Tumi which over to side. on performing are production is catch some that now teams starting well show are inventory above will for well the already starting is we chasing on some to in why very and really very, I It's

Reza Taleghani

that some that's include of those Dustin we one of are add that about, transit. the just talking inventory would inventory in numbers I also to that,

taken it's we therefore it's on well. inventory, ownership, over as literally ships but So have coming

that's So other thing. the

Dustin Wei

you Thank all. Very very Yes. helpful. much. That's

Operator

from Please go Ling you. with ahead, our comes Jefferies. Thank you. Thank next Anne Anne. question And

Anne Ling

Thank Thank lots of like Actually, questions now you, management have you. team. answered. been

America XXXX it sales Just expect good of your you Is also is be we these mention North a recovery? the for second decline in level. in that were decline like pace terms full-year, So local lost to North Does in a of XXXX. like of XX% delayed that sales will couple a to like some comment of guiding some this terms looking to able at good the year in clarify. you want second how the versus like or delay, be for of Kyle, earlier we quarter? – which like will currency And things in the America, about of improvement? it XX% quarter, mean XX% shipment because a filled in versus of are year March, the back in did that be sales

think excluding Speck like, I as that's well Russia. as

saving that? we and higher this based bit conservative, cost on the Do think the that for you you. run be based EBITDA like, you full-year. a to in guidance adjusted rate terms able current the trends, run think meet guidance on of that So should rate, fixed Thank the than also teams that do is get

Kyle Gendreau

conservative guidance. I'm on my Well, right

steady a to the ship think everything place I moment. not that's a in but at be, the with world's

factors know, around got you pressures you you’ve world, Russia-Ukraine have the of plenty still around, kind of COVID As navigating conflict, way. there's inflationary its

I plenty uncertainties to world, think convictions but I you look lower year, the for And And year. you of that on XX% I chance where start so at here our about feel And that with the you we can but XX% there's I the still in if I be for we draw down are we just the where that, the of can are feel some of tell end range. at from think good sit, China. conclusions I might to

a to That think kind little that I China fast things get can the We've the it's when we're out, puzzle. start And of piece of carved is, but does of the carved But with Russia out, that so it's of not and this does be happen. Russia even impact dip one will we in how same big out can in that. be that, range. such watching

so I'm worried not So that. about

good So on can you for decide pieces spectrum to the I us, the in want world, all range. it where the moving conviction of be have you given And continues. for that but

guiding should move. line really continues tailwind, look a it code. now of I on at will you, move showed is into fuel better, that a little half be headwind, I range really the to to that be a of you just slides think get little which all a today that the travel bit zip can continue the back all we're I If little in is to We've ex-China look Asia, trends to mentioned of And that still range, starting why that that of in guidance. what will bit differently with

side, to we've is Don't forget will On I talked think into are right you put think see mid-teens we back than mid-teens the to in what maybe some it. think EBITDA But I And about is run money way going year, that too. the an past that. the that's rate the stronger advertising. for exit about but

every in, come moving the least margins dollar in sales right at So the incremental direction.

as to think the put bit full-year than it business this leverage trajectory business be I we've can in back which I really our our remarks. for the can I will always of We think will said but that rate exit advertising, to into the expectations on years, operating my a be some what stronger run what add said continue concluding is

So had North but you can't a was. I what it remember America question,

Anne Ling

I For earlier comment like… regarding quarter, think, your North America, in second

Kyle Gendreau

Yes.

just quarter we're reason is looks shifts on it second the into way So the quarter what things the seeing? the timing for there are does some it the arriving. Some of of

a is stores. e-com our What our doing traffic’s down seeing metrics really still all bit, hasn't other I are yet our very well. domestic what U.S. are retail We call the gateway the our, but quite stores in would business do happened seeing well, We're strong. though

travelers get to Whereas still are those So They're into like still we levels. that stores down products retail are really here of And have buy come normal. foreign XXXX to own stores they starting to to lagging. and some our close very XX% from us.

the ongoing that be until those will start for I to so will that the fuel piece And recovery think move, America. North

Wholesale in now And in improving you're delays in. of strong that to I so see some from across are as catching across QX. to in in, our you'll think turning very, saw trend get QX really going as the our as we I of still the QX the They're very all bringing QX all of fast it's improvement is of inventory. anxious seeing half. it's markets, But it out of And the bit is customers brands. up an think, back demand

a really that's in we're continue the our tell chase of of us. So bring well. making we demand inventory really that sure And to in of you, front in ordered teams to all capture I'll

We side, on we make don't buffers are we inventory full-year anything. ordered some with miss so already the sort that of sure

a so this are seeing. highly will it think good really continue We terrific America teams for that with week the the teams fuel story we're was to meetings, I meetings with recovery teams, excited just North And that were and energized. our the for and from

Anne Ling

Got already it. like year the of India, also level. some and like, like also that exceeding regarding, XXXX And for just markets, another question later, ourselves is of example, the

normalized we these basis, moving sort be markets? So on what rate of forward growth a expecting more should from like

Kyle Gendreau

are past America, Well, I real kind it recovery particularly you these but Latin get have out, it'll settle markets it we're. of where Obviously once territory, opportunity, will think continue. probably won't, that

East, are low Brazil territories. markets stay in Middle so be very like kind for numbers than basis. double-digit in a of And as sales now, really we're something much more why have that double-digit to strong, well. us go achieve, booming the can don't no much These So obviously. seeing reason that forward on really which might into markets I growth is throw we penetration more these there's

teams here of And so excited. markets been are gain the I midst pandemic. to in We've think our able

globe. just that market we're the positioned. across have call call, really because quarterly didn't to a a continue think we on but and I amazing this coming talk it's we will some well And lot products

tremendously into is and And And resuming as of and the amazing there's excited Roxkin bag, our do had that made back there's Proxis the travel, half teams that half we'll really to we again but really that launches so half coming which at of to performing the plenty products end for the recovery show year it's well across on the at and plenty And That's the the technology. some year and of This and them not recovering. continue in of working as the only we've year, or I you out successful. We maybe about. end, the XXXX it really I people products in are the that we're usually Eco very launched are been the well performing list have launching is performed XX Magnum has other well marketplace. in produce launch we're really, businesses can also globe. that

underestimate we're think this two step steps we that So product don't drive. continue ahead. amazing ahead story to industry And say of sure. one I'd I for the

fuel think growth I that additional for So will everybody.

Anne Ling

Yes. Thank you.

to your Looking new products. forward

Kyle Gendreau

Yes. Thank you.

Anne Ling

Thank you.

William Yue

the much, or complete to call Reza for your conclude we for you, Thank Thank Kyle we Thank you. join and you Great. very the will today. time remarks. this, the taking With earnings everyone call today. will

Kyle Gendreau

Thanks, William. Thanks everyone for joining.

Operator

the concludes This conference. bye. Good participation. for you Thank you. Thank

William Yue	Senior Director of Investor Relations
Kyle Gendreau	Chief Executive Officer
Reza Taleghani	Executive Vice President, Chief Financial Officer and Treasurer
Dustin Wei	Morgan Stanley
Anne Ling	Jefferies LLC

Samsonite International (SMSOF) 13 May 222022 Q1 Earnings call transcript