Samsonite brushes off short-seller attack in just 2 months
Luggage titan Samsonite was subjected to a short-seller attack two months ago that wiped a billion dollars off its market cap and initiated a change of CEOs. However sixty days later, the company says this attack has had no impact on its underlying business. With a new CEO in place, and a share price that’s regaining momentum, Samsonite says its had a strong first half of the year, and expansion is on the cards.
In the last 30 days, Samsonite’s share price has appreciated by 13%
Subrata Dutta, Samsonite’s president of the Asia Pacific region, said: “The short seller attack hasn’t impacted our business at all. We haven’t lost any market share as we kept focusing on innovations and keeping our customers delighted, that is what matters to us.”
Asia is responsible for a third of Samsonite’s overall revenue, and the group has targeted it as a high-growth region. Dutta said that Samsonite had a “good first half” and expects to deliver “double-digit growth” in the second half. Hence, an Asian expansion is on the cards. In the same interview, he explained:
“We are eyeing 22 to 25 new stores in the Asia-Pacific region for Samsonite in the second half of the year to cash in on the growing demand for travellers’ goods there.”
Samsonite managed to de-fang the short seller (Blue Orca)’s attack in two ways: first, the company reiterated its strong financials and solid underlying business. And second, when it looked like former CEO Ramesh Tainwala had falsified his educational background, they replaced him almost instantly. As a result, investors still have significant faith in the Samsonite story.
Terry Hong Xueyu, a Guotai Junan Securities analyst, seems to speak for the consensus when he says: “I still have a pretty positive view on Samsonite, and I think it should be able to recover all the lost ground pretty quickly.” He rates Samsonite a “buy”.
Dominion holds Samsonite in its Global Trends Luxury Fund.
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