Samsonite International S A : Announces Results for the Six Months Ended June 30, 2019

For Immediate Release

Samsonite International S.A. Announces Results for the

Six Months Ended June 30, 2019

HONG KONG, August 21, 2019 - Samsonite International S.A. ("Samsonite" or "the Company", together with its consolidated subsidiaries, "the Group"; SEHK stock code: 1910), the world's largest travel luggage company, today published its unaudited consolidated financial results for the six months ended June 30, 2019.

Overview

Commenting on the results, Mr. Kyle Gendreau, Chief Executive Officer, said, "We are encouraged by our progress in the first half of 2019 as we continued to execute on our strategy to reposition the business for long- term growth and profitability. At the same time, we remain focused on navigating the macro-economic headwinds impacting our performance in certain markets, including the United States ("U.S."), which was affected by increased tariffs on products sourced from China and lower foreign tourist traffic, China's business- to-business ("B2B") market, South Korea and Chile."

Excluding those four markets, the Group continued to achieve steady growth in Europe and key Asian markets including Japan and India. For the six months ended June 30, 2019, the Group achieved constant currency net sales gains in all regions except North America (-5.7%1): Asia (+0.2%1; +4.6%1 excluding B2B net sales in China and net sales in South Korea), Europe (+1.9%1) and Latin America (+3.4%1; +11.9%1 excluding Chile). Overall, the Group's first half 2019 net sales decreased by 1.5%1 year-on-year against a strong first half in 2018. Excluding the four challenged markets, the Group's net sales grew by 3.5%1 during the first six months of 2019.

During the second quarter of 2019, the Group's overall net sales performance began to show signs of stabilizing, with improved performance in China and Latin America, along with continued growth in Europe, Japan and India. Even though B2B sales in China remained slow and the Group has been managing down the mix of sales from this channel, net sales in China increased by 5.1%1 year-on-year (or +11.2%1 excluding B2B), up from the 8.3%1 net sales decrease (+5.9%1 excluding B2B) recorded during the first quarter of 2019. Latin America had a strong second quarter, with net sales growth of 12.5%1 compared to a decrease of 2.8%1 in the first quarter of 2019. Overall, the Group's net sales decreased by 0.7%1 during the second quarter of 2019, an improvement compared to the 2.4%1 decline recorded in the first quarter of 2019.

Mr. Gendreau remarked, "As we navigate the business through the current macro-economic headwinds, we are focused on managing our cost base to position Samsonite for future growth. The Group's profitability was adversely affected by the combination of lower net sales and increased distribution expenses related to the expansion in bricks-and-mortar retail during 2017 and 2018, particularly in Europe. We responded with focused actions to tighten expense and working capital controls in the second half of 2018, and accelerated these initiatives during the first half of 2019, including making leadership changes in both Europe and South Korea. We

1 Results stated on a constant currency basis, a non-International Financial Reporting Standards ("IFRS") measure, are calculated by applying the average exchange rate of the comparable period in the previous year to current period local currency results.

1

For Immediate Release

saw the benefits of these ongoing efforts to enhance margins begin to emerge in the second quarter of 2019, and are pushing to accelerate our repositioning of the business for sustained growth and improved profitability going forward."

The Group's Adjusted EBITDA2, 3 and Adjusted Net Income2, 4 both showed signs of improvement. Second quarter 2019 Adjusted EBITDA decreased by 13.0% compared to the same period in 2018 (as recast to adjust for IFRS 16 impacts)2, a considerable improvement following the 27.6%2 year-on-year decline recorded in the first quarter of 2019. As a result, the Group's Adjusted EBITDA margin5 decreased by 150 basis points2 to 13.9% for the second quarter in 2019 versus 15.4% for the same period in 20182, a significant improvement compared to the 300 basis points2 decline recorded in the first quarter. The Group expects its profit enhancement initiatives will continue to yield benefits going into the second half of 2019 and into 2020. Overall, the Group's first half 2019 Adjusted EBITDA decreased by 19.4%2, 6 year-on-year, and its Adjusted EBITDA margin was 12.2% for the first half of 2019, a decline of 210 basis points2, 6 compared to the first half of 20182, 6."

For the six months ended June 30, 2019, the Group's Adjusted Net Income decreased by US$14.2 million2, 6 to US$97.0 million from US$111.2 million for the same period in 2018 (as recast to adjust for IFRS 16 impacts)2, 6. This represents a decrease of 12.8%2, 6 year-on-year and an improvement compared to the 40.3%2 year-on-year decline in Adjusted Net Income recorded for the first quarter of 2019.

The Group's disciplined approach to working capital management, cash flow generation and deleveraging the balance sheet has begun to deliver positive results. Cash generated from operating activities more than doubled

1. On January 1, 2019, the Group adopted IFRS 16, Leases ("IFRS 16"). The Group has applied IFRS 16 using the modified retrospective approach and therefore the comparative information for six months ended June 30, 2018 in the "as reported" column in the Key Financial Highlights table below has not been restated and continues to be reported under International Accounting Standards ("IAS") 17, Leases ("IAS 17") and IFRS Interpretations Committee ("IFRIC") 4, Determining whether an Arrangement Contains a Lease ("IFRIC 4"). The Group has included with respect to the six months ended June 30, 2018 an "as adjusted for IFRS 16" column in the Key Financial Highlights table below to present its financial performance for the six months ended June 30, 2018 on a comparable basis. Such amounts reflect management's best estimate on its evaluation of the impact and are non-IFRS measures. For further discussion regarding the Group's adoption of IFRS 16 on January 1, 2019, see note 3(b) Changes in Accounting Policies and note 16 Leases in the Notes to the Consolidated Interim Financial Statements in its Interim Results Announcement for the six months ended June 30, 2019 filed with The Stock Exchange of Hong Kong Limited.
2. Adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA"), a non-IFRS measure, eliminates the effect of a number of costs, charges and credits and certain other non-cash charges. Adjusted EBITDA includes the lease interest and amortization expense as a result of the Group's adoption of IFRS 16. The inclusion of IFRS 16 lease interest and amortization expense in Adjusted EBITDA allows this non-IFRS measure to be more comparable with the previous period's Adjusted EBITDA disclosure. The Group believes Adjusted EBITDA is useful in gaining a more complete understanding of its operational performance and the underlying trends of its business.
3. Adjusted Net Income, a non-IFRS measure, eliminates the effect of a number of costs, charges and credits and certain other non-cash charges, along with their respective tax effects, that impact the Group's reported profit for the period, which the Group believes helps to give securities analysts, investors and other interested parties a better understanding of the Group's underlying financial performance.
4. Adjusted EBITDA margin, a non-IFRS measure, is calculated by dividing Adjusted EBITDA by net sales.
5. For the six months ended June 30, 2019, the Group's
6. • Adjusted Net Income decreased by US$22.7 million, or 19.0%, to US$97.0 million;
   • Adjusted EBITDA decreased by US$63.3 million, or 22.9%, to US$213.5 million; and
   • Adjusted EBITDA margin decreased by 280 basis points year-on-year to 12.2%.

2

For Immediate Release

to US$113.0 million7 in the first half of 2019, primarily driven by improved working capital management. Separately, cash used in investing activities in the first half of 2019 decreased by US$17.4 million year-on-year, driven by a US$15.1 million year-on-year decrease in capital expenditures mainly due to fewer new store openings.

As a result, net debt was US$1,432.8 million as of June 30, 20198, US$155.6 million lower than the same date a year ago. With this improvement in the Group's net debt position, the Group's pro forma net leverage ratio9 was steady at 2.60:1:00 for the first half of 2019 compared to 2.57:1.00 for the same period in 2018, notwithstanding the decline in Adjusted EBITDA year-on-year. Separately, at June 30, 2019, the Group had US$624.3 million in liquidity available on its revolving credit facility.

Outlook and Strategy

Commenting on the outlook, Mr. Gendreau said, "The global outlook remains uncertain as we enter the second half of 2019, with U.S.-China trade tensions rising, Brexit still unresolved, economic growth slowing in parts of the European Union, the recent events in Hong Kong, and a general increase in political volatility and economic uncertainty impacting consumer sentiment worldwide. Considering these ongoing challenges, we will continue to invest in the business to position ourselves for long-term growth while maintaining our focus on controlling costs, managing working capital, generating cash and strengthening the balance sheet."

"We will continue to diversify our sourcing base and to renegotiate pricing with vendors to address the recent U.S. tariff increases. In addition, we intend to temporarily reduce advertising spend for the second half of 2019 to help offset the pressure on our profitability caused by current headwinds. We plan to execute this intended reduction in a targeted manner to ensure continued support for our growth initiatives, including the Tumi brand's further international expansion, our DTC e-commerce growth strategy and planned new product introductions."

In the first half of 2019, the Tumi brand continued to record solid net sales growth of 4.8%1 in the first half of 2019, driven by sustained robust growth in Asia (+11.9%1) and Europe (+20.4%1). The Group will continue investing in expanding the brand's presence in international markets.

In the first half of 2019, the Group's DTC10 e-commerce net sales increased by 23.9%1, excluding eBags which was affected by the Group's actions to improve profitability. The Group will continue to invest in its DTC e- commerce growth strategy and focus on improving the margins of the eBags business.

Exciting and innovative new products have always been a key driver of our business, and we will continue to make significant investments in product research and development as well as in marketing to drive our brands' success globally. The Samsonite brand, in particular, has a long and illustrious history as the industry leader in

1. The Group generated US$192.6 million of cash from operating activities during the six months ended June 30, 2019 compared to US$56.2 million for the first half of 2018. Excluding the impacts from IFRS 16, operating cash flow was US$113.0 million for the first half of 2019, reflecting a US$56.8 million increase from the first half of 2018.
2. As of June 30, 2019, the Group had US$489.3 million of cash and cash equivalents and US$1,922.1 million of debt (excluding deferred financing costs of US$14.9 million), resulting in a net debt position of US$1,432.8 million.
3. Pro forma total net leverage ratio is calculated as (total loans and borrowings less total unrestricted cash) / last twelve months Adjusted EBITDA.
4. The direct-to-consumer ("DTC") distribution channel comprises company-operated retail stores and direct-to-consumere-commerce.

3

For Immediate Release

innovation. We launched a number of exciting new products this year already and have a strong new product pipeline planned for the remainder of the year.

Mr. Gendreau concluded, "We remain focused on executing our cost cutting and profit enhancing initiatives, including increasing our bricks-and-mortar retail profitability while continuing targeted retail expansion at a slower pace, maintaining tight control on non-advertising SG&A expenses, and continuing to improve net working capital efficiency by bringing inventory turnover days back in line with prior years. These initiatives have begun to positively impact our results in the first half of this year, and we expect they will position the business to deliver improved results going into the remainder of 2019 and into 2020."

Table 1: Key Financial Highlights

1. Operating profit for the six months ended June 30, 2019 decreased by US$44.7 million, or 21.5%, to US$163.6 million when excluding the non-cash charge for the impairment of lease right-of-use assets and property, plant and equipment attributable to certain retail locations and the costs to implement profit improvement initiatives during the six months
   ended June 30, 2019, compared to US$208.3 million for the same period in the previous year (as recast to adjust for IFRS 16 impacts)2.
2. Profit attributable to the equity holders for the six months ended June 30, 2019 decreased by US$13.8 million, or 13.9%, to US$86.1 million when excluding the non-cash charge for the impairment of lease right-of-use assets and property, plant and equipment attributable to certain retail locations and the costs to implement profit improvement initiatives,
   net of the related tax impact during the six months ended June 30, 2019, compared to US$99.9 million for the six months ended June 30, 2018 (as recast to adjust for IFRS 16 impacts)2 when excluding the non-cash charge of US$53.3 million and the related tax impact during the six months ended June 30, 2018 to write-off the deferred financing costs related to the refinancing of the Group's original senior credit facilities in the first half of 2018.
3. When comparing the actual results for Adjusted Net Income and Adjusted EBITDA for the six months ended June 30, 2019 against the "as adjusted for IFRS 16" results2 for the six months ended June 30, 2018, the year-on-year changes were:
4. • Adjusted Net Income decreased by 12.8% (-11.3% constant currency);
   • Adjusted EBITDA decreased by 19.4% (-16.4% constant currency); and
   • Adjusted EBITDA margin decreased by 210 basis points.

4

For Immediate Release

Table 1: Key Financial Highlights (continued)

The Group's performance for the six months ended June 30, 2019 is discussed in greater detail below.

Net Sales

Economic headwinds continued to impact certain of the Group's key markets during the first half of 2019, particularly the U.S., China's B2B market, South Korea and Chile. Excluding these four markets, the Group's net sales grew by 3.5%1, driven by a 4.6%1 increase in Asia (excluding B2B net sales in China and net sales in South Korea) and 1.9%1 growth in Europe. Overall, the Group's net sales decreased by 1.5%1 for the six months ended June 30, 2019. Unfavorable foreign currency conversion had a negative translation impact of approximately US$65.2 million, resulting in a 5.0% decrease in the Group's US Dollar reported net sales to US$1,755.7 million during the first half of 2019.

Net Sales Performance by Region

North America

During the first half of 2019, net sales in North America decreased by 5.7%1 year-on-year to US$654.3 million, driven by a 5.6% decline in net sales in the U.S. This reduction was mainly attributable to a 7.3%1 decrease in North American wholesale net sales as uncertainty about the timing and outcome of U.S.-China trade negotiations resulted in greater caution among U.S. retailers, leading them to more closely manage inventory levels and to shift the timing of wholesale orders. The Group's North American DTC net sales (which include net sales from both bricks-and-mortar retail and DTC e-commerce) were affected by ongoing efforts to phase out sales of certain lower margin third party brands on the Group's eBags e-commerce website to enhance profitability, as well as lower bricks-and mortar retail sales due to reduced foreign tourist traffic into gateway markets in the U.S. Excluding eBags, DTC net sales in North America were up slightly by 0.1%1 year-on-year, with strong growth in DTC e-commerce (+20.6%1) offsetting headwinds in bricks-and-mortar retail. Overall, the Group's North American DTC net sales decreased by 3.5%1 during the first half of 2019.

14 Adjusted basic and diluted EPS, both non-IFRS measures, are calculated by dividing Adjusted Net Income by the weighted average number of shares used in the basic and diluted EPS calculations, respectively.

5

This is an excerpt of the original content. To continue reading it, access the original document here.