Samsonite pivots more to backpacks, handbags to ride out Covid

Samsonite International SA said it’s speeding up its shift toward the emerging non-travel segment as the coronavirus pandemic devastates the global luggage business.

With expectations that travel won’t return to normal levels for more than a year, the world’s top luggage maker is relying on backpacks, business cases and women’s bags to cushion the blow. The segment now makes up close to half of the company’s sales, up from 40% a year ago.

“What has Covid done? It has accelerated our portion of ‘Beyond Travel,’” Paul Melkebeke, the company’s newly appointed president for APAC & Middle East, said in an interview Monday. “These were old trends that were already underlying, but with Covid it just has gone a lot faster.”

Samsonite, based in Mansfield, Massachusetts, is facing its worst year since listing on the Hong Kong exchange in 2011, as the pandemic has hit retailers and the airline industry particularly hard. The owner of brands ranging from Tumi to American Tourister saw revenue drop 58% for the first nine months of the year. Its shares have tumbled 28% in 2020.

Samsonite has taken aggressive steps to streamline the organization. It has closed more than 10% of its company-owned stores this year through September, according to its quarterly statement.

“We have been obliged to say goodbye to some of our people,” Melkebeke said. “But everything was there to focus on our management and make sure that we are strong enough to bring it to the other side.”

Difficult Time

While he remains “bullish” on the future of travel, Melkebeke said he’s “100% certain” the industry can’t return to normal levels by the end of next year. That will likely need to wait for the widespread deployment of vaccines to bring Covid-19 under control.

In the quarter ended September, Samsonite’s core travel brands were down 67% compared with the previous year, while its non-travel brands such as Gregory, Speck, and eBags fell a more moderate 27%.

With the social distancing restrictions in place, people are turning to more outdoor activities, benefiting Samsonite’s backpacking brands such as Gregory and High Sierra, Melkebeke said. Samsonite is also developing antiviral technologies for its products to address consumers’ concerns about the virus.

“Don’t forget when you travel with the plane, there’s a moment when you give your luggage away, you collect it on the other side, and you have no idea what has happened with that,” said Melkebeke. “The hygiene factor might be something that will be there forever.”