Samsonite (Samsonite) Is Facing A Debt Crisis Affecting The Travel Market.

According to foreign media reports, Samsonite (Samsonite), the world's largest brand luggage maker, is facing a debt crisis. The impact of the epidemic on Samsonite with high gross margins is not fatal, but it is not the same thing. The long damage to the supply chain (the failure to recover the money from factory failure) and the double blow of global sales growth may reduce the solvency of the company.

In the early March, S & P lowered its expectations for the performance of Hong Kong listed companies. As of September 30, 2019, the amount of debt that Samsonite needed to repay was about three times the size of its revenue, and some of its debt came from its acquisition in 2016. Samsonite spent $1 billion 800 million to buy Tumi, a business case brand. The S & P global believes that the debt burden also weakens the company's ability to buffer itself against emergencies such as the new crown epidemic.

However, considering the cost control capability of Samsonite's sales channel is stronger than other small suitcase manufacturers, the S & P and Moodie Forecast Ltd have the ability to maintain cash flow balance in the short term. Samsonite has 1300 self operated stores around the world, and its gross margin remains around 60% in 2019.

Faced with many unfavorable factors, the epidemic is worsening.

Before the outbreak, the 100 year brand had already encountered many unfavorable factors. Investors have raised concerns and questions about the overvaluation of the Tumi acquisition process. Samsonite changed the CEO after the "accounting incident". The management change has attracted the attention of the outside world for some time.

Last year, by the impact of international changes, the company's revenue performance declined. Its net sales in the first half of 2019 amounted to $1 billion 750 million, down 5% from the same period last year, and its operating profit was $124 million, down 38%.

In recent years, the growth of global tourism has led to the development of luggage market. Data predict that by 2024, the size of the global luggage market is expected to exceed US $190 billion. The outbreak of the coronavirus caused consumers' travel panic, which had a huge impact on the tourism industry, while affecting the tourism supplies market. Other travel brands, including Samsonite, are also facing a huge slowdown in sales growth.

About 60% of rookie Li's income comes from luggage and luggage, as well as sportswear and backpacks. The Asian market accounts for about 1/3 of Samsonite's global market, and about 8% of its total revenue comes from China. The clippate travel demand of Asian tourists has a direct impact on the company's revenue. In addition, most factories in China are located in China and Southeast Asia. After the outbreak of the epidemic, the supply chain system of enterprises was affected. The factory began to shut down in February, and some factories closed down, which increased the pressure of enterprises to recover the payment of goods.

In addition to the challenges brought by the epidemic, new brands entering the travel market also bring competition pressure to Samsonite. For example, the Internet DTC luggage brand Away, through social media operation and dissemination, quickly get the favor of seed users and stars. Since its inception in 2016, the amount of financing has reached US $156 million, and in 2019 it was valued at about US $1 billion 400 million.

One of the ways to deal with competition is takeover. Samsonite has also tried to take this route to acquire Tumi, but it is expensive. Now, affected by adverse factors such as the epidemic, Samsonite may slow down the acquisition expansion plan, focusing on debt repayment and management of stores.