Samsonite dreams of an Italian empire
Last year saw air traffic in Italy increase by 4.6%, meaning that a record-breaking 164 million passengers took to the air from an Italian airport in 2016. In the rest of the world, numbers grew even more: +6% from 2015 to an enormous 3.7 billion people. For global luxury luggage seller Samsonite, the outlook is simple: it’s a great time to be in business.
Samsonite’s share price is up by 36% so far this year
SOURCE: Yahoo Finance
However, while Italy may not have matched the increase in flights seen elsewhere, the country has a special appeal for Samsonite. Fabio Rugarli, CEO of Samsonite in Italy, said:
“2016 was a memorable year and the Italian market—the second-biggest in Europe, after Germany—grew for us by 11.3% to €63 million. Fortunately we have seen the same trend in the opening months of 2017. Even now our sales aren’t just restricted to the travel sector, which comprises 64.7% of our turnover: the Samsonite brand has been diversifying for many years, with lines of bags and briefcases, purses and accessories. Italy is strategic not only as a market, but also because our Personal Accessories division's style office is located in Saltrio, near Varese. This office takes care of designs, plans for prototypes, quality control, and marketing for all of Samsonite Europe.”
Samsonite is unquestionably about premium products, and has never looked to compromise on quality. To let it enter other price points, it has acquired other brands instead. Rugarli commented on how this worls using last year’s Tumi acquisition as an example:
“In 2016 we bought Tumi, which is going strong in the United States and has enormous potential in Europe as well, and we're looking for a more prestigious location for our store in Milan. In just the first five months after the acquisition (August-December 2016), Tumi’s sales reached €260 million. We will invest a great deal into direct retail in 2017, in Italy as well: our sales in single-brand stores rose by 17% in 2016, almost six points higher than the overall performance. Direct retail is another point of strength for us, both in stores and online. It now accounts for half of our sales.”
Italy has far more than a strong air travel sector as far as Samsonite is concerned: the other travel industries (such as train) are equally important to Samsonite, and the company sees the Italian market as a fast grower in the near future.
Dominion holds Samsonite in its Global Trends Luxury Fund.
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