Samsonite Group S A

Good morning, good afternoon, and good evening, ladies and gentlemen. Welcome to SAMHSA NIAID Group 2025 Annual Results Conference Call. To ask a question during the session, you need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please note that this conference is being recorded. I would now like to hand the conference over to Mr. Alvin Consencion, Vice President of Investor Relations. Thank you. Please go ahead, sir.

Thank you. Welcome to the Sapsonet Group fourth quarter conference call. On the call with us today are Kyle Gendro, Chief Executive Officer, and Tom Pizzuti, Chief Financial Officer. Before starting today's call, we would like to remind you that any forward-looking statements made on the call involve risks and uncertainties that are subject to the company's provisions as stated in disclaimers in the company's press release and earnings announcement, and that actual results can differ materially from those described in the forward-looking statements. With that, I'll now turn the call over to Kyle.

Okay. Thanks, Alvin. Thanks, everyone, for joining us. We're sitting here in New York in our TUME offices, and we're happy to talk about Q4. I'm on page five of the deck. In Q4, we turned to positive net sales growth for our business. Our net sales increased on a reported basis 2.2% and approximately 1% on a constant currency basis. The chart to the right of the page, you can see the sequential improvement that we were talking about as we exited Q2 into Q3 and then meaningfully accelerating to positive growth in Q4. That was driven by many things, but importantly, innovative products. We had some terrific products that launched at the back half of Q3 and Q4 and strong execution across our teams across the globe. In particular, we had a strong portfolio of new products, as I said. And we had very strong growth in our D2C business and our non-travel business, despite headwinds. We're key drivers for improving to positive net sales growth in Q4. Additionally, we saw sequential improvements in our travel category, driven by continued strength in global travel and, again, global operating execution. Despite tariffs, our gross margins expanded for the quarter. Q4 gross margins, 60.3, a 10 basis point improvement over last year. due to regional mix, brand strength, and really strong mitigations of the tariffs that we saw in the United States. We continue to be focused on our key strategic growth pillars. We will continue to execute the pillars and the roadmap to leverage our skill advantages in product innovation, increase marketing spend, and enhance consumer engagement to drive our net sales in 2026. On page six, another lens of what we were talking about, we talked about the net sales growth and sequential improvement really from exiting Q2, strong improvements in Q3, and again, back to positive growth on a constant currency basis for Q4. You can see the gross margin improvement, not just from last year, but from Q3 to Q4, very strong. That has to do a bit with mix and channel mix as our D2C business accelerated, and also our higher brands delivered a meaningful improvement. You can see on the EBITDA side, our EBITDA in dollars was flat to last year, Q4, and as a margin percentage in the 20s, 20.3% for the quarter. If I go by brand on the next page, you can see all brands delivering performance. Meaningful improvement, I said strong sequential improvement in our Samsonite business. That was driven across Asia, North America, and Europe, and meaningful improvements from Q3 to Q4. Just about positive for the quarter. To me, held strong. We had a very strong Q3 and a very strong holiday season. And it's another quarter where all three of our major regions were positive in Q4 for Brandtumi. We saw some improvement in American Tourister, so I'd say sequential improvement Q3, Q4. But importantly, our Asia business was back to positive growth. Asia is a big driver for American Tourister, and we saw 2.3% growth in Q4 versus a minus 3.6 in Q3, so meaningful improvement in American Tourister. And on page eight, if we look at regions, you'll see this steady movement in Asia. Asia meaningfully improved. This was a region that started to show meaningful improvement in Q3 and reached 5.1% growth on a constant currency basis in Q4. We saw meaningful improvements in China, Korea, and strong performance in India and Japan. And these are big markets that really moved the needle for Asia. And as they started to move back to strong growth positions, we had a great result for Asia. You saw a tremendous shift in North America, still negative, facing tough prior year comparisons, but meaningful improvements in both U.S. and Canada in both our direct-to-consumer and our wholesale businesses. And then I would label Europe as steady, you know, 1% growth both quarters. We saw very strong D2C performance, particularly in Q4 in Europe. Overall, 5.6% growth. D2C retail up 4.4%. and our e-comm was up over 9%, so strong and steady improvement or performance in Europe. And then Latin America looks like it took a dip in Q4. If I exclude Mexico, and Mexico for much of this past year, we were talking about the wholesale customers being impacted with trade imbalances, particularly with the US. If I exclude Mexico for Q4 or plus 8.2, And encouragingly, as we get into the first quarter of 2026, we're seeing Mexico back to strong growth as these consumers, these wholesale customers are buying. So Mexico or Latin America is in a good place for us, particularly as we step into Q1. On page nine, you've seen this slide before. I think the important piece is here is our net sales growth has historically tracked well with travel. As you remember, in the coming out of pandemic, we had surged in growth. So 2021 to 24, we grew six times the industry. We see the travel continuing to grow as we stepped into 24 and 25. And importantly, as we get to Q4, we turn to growth. And really, I expect this business to continue to correlate to travel really well. But a bit of the dip that we saw at the start of this year was really off the back of really strong, strong performance coming out of COVID, the few years coming out of COVID. And you can see our performance versus travel on the left of the page. Global passenger miles up 109 or 9% to the 2019 levels. And our business is up 24% to 2019 levels. We saw tremendous progress in our D2C e-commerce business. It's our fastest growing channel, leading to significant increases in our D2C mix. So if you look Q4 of last year to this year, our D2C is now 45.1% from 43.1% last year. D2C e-commerce overall was up 12%, and our D2C blended was up 5.2. We saw a slight increase in our retail business, 2% growth, with a comp that was slightly negative, but we've had store openings as well that is feeding a good direct-to-consumer combined business. Wholesale was still a decline, down 2.3%, but we saw a sequential improvement from the prior quarter, which was down 4.5%. We still have customers within the U.S. channel buying in a lumpy way, And that's part of the pieces that we've been seeing all throughout 2025. And that carried a bit into Q4 as well. But overall, moving in a good direction, both wholesale and for sure retail. We've talked a lot about the opportunities in non-travel. We've been steadily growing here. And in Q4, we saw non-travel category grow 6.7% versus the prior year. And you can see as a percent of sales, this continues to move for us, 37.6% of sales versus 35.5 last year. So continuing to move in a direction that we'd expect. There's a slight decrease in travel, 2.2% versus the prior year, but sequentially improved from the negative 5.3%. So as we continue to see travel growth, and we start to get past the inflection point of revenge travel, and we see consumers leaning in and buying on the travel side as well. Page 12, just in one page, Clearly spells out the strategic priorities that we're focused on as a company across the entire company to drive accelerated growth. We really characterize these in four buckets. Amplify and elevate the awareness of our iconic consumer-centric brands. I'll cover each of these in just a bit on the pages to follow. Be the clear winner in digital to further support our multi-channel growth. And when I talk about digital, it's our own D2C, e-com, wholesale, e-retailers, and across the network that help feed the entire channel growth for the business. Seize the white face opportunities in lifestyle bags and accessories, what I just talked about. We continue to grow there, and I think there's tremendous opportunities to grow more there. When we look at the market share in that channel compared to our luggage channel, we see meaningful opportunities to evaluate and grow further, which we've been doing consistently for many years. I think we can do more. And they can continue to win with products that resonate globally. And I'll show you a few examples of that as I go through the deck. And this is a meaningful effort on our part to be more coordinated in our product development and to have big winners across the globe on the luggage side. Elevating, I'm on page 13, elevating our iconic brands via world-class storytelling. We're very focused on elevating The level of storytelling, we've been doing this for a while, but we've added a new global function, a global marketing and e-comm office led by our new VP marketing and e-comm to coordinate enhanced global brand building and digital efforts across the globe. We're very focused on amplifying our iconic consumer-centric brand, strengthening global brand consistency while ensuring regional flexibility for local relevance, which we've been doing for a long time, but harnessing the power of a global organization. Drive higher impact storytelling across channels to elevate awareness and brand perception. And importantly, related to this, drive marketing efficiency and impact. We expect to increase our marketing spend. I think I talked about this on the last call. You should expect me to step this up. We're planning and targeting 6.5% of net sales in 2026 to be deployed with greater consistency and impact across all of our brands. We're leveraging scale and experience to become the clear winner in digital. And what do I mean by that? This is really focusing on digital execution strategy, drive engagement, conversion, and customer lifetime value. We're investing in a more unified digital experience with personalized user journeys across both D2C and e-retailer channels. We're promoting e-commerce excellence through the newly created GMEO resources. And we're leveraging data-driven capabilities to align digital marketing strategies across channels and brands. Everything with an enhanced focus as we move to be a leader, the clear leader in digital. As I said, there's tremendous opportunity in what we label the white space of non-travel within our business. We have exciting new products that we've launched in this cycle. Tumi Alpha, Alpha 4 is a top collection. I'll cover it in another page. We launched this in January 26 with very good reception, and this backpack is a driver for the Tumi business. It is really well-received and off to a great start. We talked about Samsonite Parallax in our last calls. This is an award-winning design, two-in-one backpack. This continues to perform. And Samsonite EcoDiver, you can see the bag on to the right, that's a top collection, within the top five of our Europe overall collections, continuing to grow and we're expanding the offering. And I think importantly, a space we plan to take a deeper dive into defining the opportunities within this lifestyle bag space with resources dedicated to exploring the full potential. On the product side and products that have global resonance, I have a few examples in the pages here. This is Nexus, launched in Q1 in Europe. It'll launch in Q2 across the rest of the world. And it's off to an amazing start, exceeding our expectations. This is a product that's evolving lightweight with Samsonite materials. It's really one of these next global collections. It looks and feels like Samsonite. It's crafted using our Roxton technology, one of our most advanced shell materials. manufactured in our European facilities, and it really combines exceptional strength with ultra-lightweight performance. And you'll start to see this across the globe as we step into Q2. And again, it's off to a tremendous start. And then last year, we talked about Parallux, and Parallux has been a really amazing global launch. We launched this in Q3 of last year. It was so successful in certain styles, we ended up out of stock by the time we stepped into the start of 26th. We're in the midst of replenishing right now, and I expect this to really capture pent-up demand and be a big driver of our sales for the year. It's generated $18 million of sales in a very short order in 2025. And this is a collection that demonstrates success in combining award-winning innovation, designed with all of our designers across the globe with high-impact, cohesive media campaigns. And we brought both of those together, and it speaks to what we're capable of doing when we get products that have global recognition. We're adding new colors here, and we're adding new collections on the non-travel piece for this as well. I expect this to be a big driver for us in 2026. And then we're messaging with younger consumers. This was an exciting – I don't know if you're a Stranger Things fan, but I'm a Stranger Things fan. And in Asia, we launched Expanding Your Stranger Side, a collaboration with the Stranger Things. Both pieces really interesting. My son's traveling with the blue one there and gets comments all the time. And it really drives and captures the imagination of a younger consumer with Brand American Tourister. And this was really well received, well placed within Asia, and talks about the capabilities across all of our brands to really message to the consumers we're looking for. And then lastly on the product, we introduced the Next Generation Alpha 4 Collection. This is a meaningful collection, top collection within our 2Meet portfolio. And it really speaks to our ability to launch these collections. It's a more streamlined product, streamlined pocketing, silent magnetic closures, intuitive access points, and really engineered, and I might even say engineered with a lighter construction. It's really noticeably different, both on the travel pieces and the backpacks. And it's off to a good start, particularly on the backpack side, well, well received across the globe. And you can see campaigns, two campaigns. We have our global Ambassador Lando Norris on the left, and Asia Pacific Grand Ambassador Wee Dachshund that we've added, and both have been well-received as we launched this product. You couldn't have missed it in Q1 of this year. And just lastly on sustainability, just two things. One, we're being recognized, okay? And I won't go through all of what we've accomplished. Our ESG report will come out next month, and I always tell people, read the ESG report. You've got to lens into our business and what we're capable of doing from an innovation perspective and from a sustainability perspective. And we're recognized, I think importantly, we're recognized in time as world's best companies in sustainable growth, 25 and 26. We were number 74 out of 500 and number six in retail, wholesale, and consumer goods. That is a meaningful recognition of what we're doing. And Parallax, which I covered earlier, was a winner of two Red Dot Awards, one on sustainability design and one on overall design, speaks to what we're doing in this space. And then from a ratings perspective, my view is we're right where we want to be. From an MSCI rating, a double A, that's a step up. In CDP, we continue to be a climate score B, which is exactly where we want to be. We're being recognized. We're getting special mentions across many industries or many lenses on what we're doing on the sustainability side. And again, last, before I hand off to our new CFO, Tom Pizzuti, definitely take a look at the report. It'll be out in April. So I'll hand off to you, Tom, and I'll come back for some outlooks at the end.