Samsonite International S.A. said this week that it has delivered on its IPO promises, reporting major gains in Asia as it wrapped up its first year as a public company.
The world's biggest luggage maker is one of a number of foreign companies to go public in Hong Kong, drawn by China's economic growth and a rapidly expanding number of consumers. Samsonite went public in June and Italian fashion house Prada SpA quickly followed. Luxury handbag maker Coach, which is already listed in New York, unveiled its secondary offering in Hong Kong in December.
Asia and other emerging markets represent a gold mine for international brands, as they reach out to a growing middle class. But some of these recently public companies have seen their stock price suffer as their debut coincided with a host of global economic problems that took a toll on consumers and markets worldwide.
Samsonite, however, had a confident take on the picture. It reported Tuesday that its full-year revenue increase 29 percent to $1.59 billion for the year. That was due largely to a gain of nearly 43 percent in revenue from Asia and a 28 percent improvement in North America. Latin America showed a 22 percent gain in sales and Europe nearly 18 percent.
"The global traffic market is very strong, despite the ups and downs, particularly in the European economies, last year," Samsonite chief executive Tim Parker told investors. "The newly enfranchised middle classes are getting on their planes and trains and automobiles. Travel is the first thing that anybody who acquires a degree of higher income or wealth wants to do."
Samsonite, he argues, is one of the businesses best positioned to benefit from these trends in emerging markets and modest recoveries in more established markets.
The company's net income for the year fell 76 percent to $86.7 million. But after adjusting for a number of charges and changes to accounting standards, profit rose 30 percent to $136.8 million, or 10 cents per share, year-over-year. That is above the $64.2 million it forecast in its IPO prospectus.
Samsonite, which was founded in 1910 in Denver and is now incorporated in Luxembourg, has the international brand strength that has helped companies such as Nike Inc. and Coca-Cola Co. succeed in foreign markets. .
The company said it is working diligently to appeal to consumers differently in each market to drive further growth. Americans tend to prefer robust, rugged luggage while Europeans are driven by style and lightness, Parker said. In Asia, the segmentation goes deeper with popular leather products in China being very different from those sold in Korea. It focuses on a much more structured product for Japan with locks and frames that aren't appealing in other products around the world.
The company said it will continue to invest in product and marketing to drive its growth and sees China, Indonesia and some of the more stable European countries, such as Germany and France, as keys to growth next year.
"This year is just a confirmation of our strategy," Parker said.
Samsonite forecast more modest growth for the full year after the explosive gains in 2011. It expects double-digit growth in Asia and upper single-digit growth in more mature economies.
Investors, however, may have been looking for bigger gains. Samsonite shares fell Tuesday in Hong Kong after it reported earnings and lost another 1 percent on Wednesday.