Samsonite Group S A

Good day and thank you for standing by. Welcome to SAMHSA NITE 2026 Interim Results Presentation. At this time, all participants are in the listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you need to press star 1 and 1 on your telephone. Please be advised that today's conference is being recorded. I would now like to hand the call over to your first speaker today, Mr. Alex Concepcion, VP, Investor Relations. Thank you. Please go ahead.

Thank you. Welcome to the Samsonite Group Interim Results Conference Call. On the call with us today are Kyle Gendreau, 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 this call involve risks and uncertainties that are subject to the company's provisions, as stated in the 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. I'll now turn the call over to Kyle. Okay, thanks. Thanks, everybody for joining. We're excited. We have a lot of things to talk about, including news that we put out earlier in the day today that I think many of you would have seen. I'm on slide five. So whoever's managing the slides, I'm going to start right in. So importantly, we're making strong progress on our key growth pillars that we've been talking about and we're executing against, which is helping drive resilient sales in this business. We're focused on amplifying and elevating the awareness of our iconic and consumer-centric brand. We've increased the advertising spend, as we signaled, in the first half of the year. We're really investing and continuing to invest behind our brands to push the business. We're very focused on being the clear winner in digital to further support not just our own D2C e-comm business, but our multi-channel approach to growth in the business. In our first half, our D2C e-comm business grew faster than any other channels in our business. led by double-digit growth in Asia and Latin America and strong growth across the business. And importantly, our share of digital business, both in our own direct-to-consumer e-com and our broader DC e-com and our wholesale e-retailer business, both increased as a percentage of our business. We continue to go after the white space opportunities and lifestyle bag. That business in the first half continued to grow. And we saw penetration increase in our business as well in these lifestyle bags. led by strong performance across all of our brands, but particularly Samsonite, Gregory, and Tumi had really strong results within that space. and we continue to resonate globally. We continue to drive the business with products that resonate globally. And so we had some really successful launches at the end of last year that continued right into this year. And some new launches this year, I'll cover them in the deck, but products like Samsonite Nexus are off to a tremendous run. A relaunch of Alpha in Tumi, Alpha 4, been really well received. And Samsonite Parallax just continues to grow and will continue to fuel growth in the back half of the year. And then lastly and excitingly we announced last night or earlier this morning for those in Asia a definitive agreement to acquire BASE. BASE is a fast-growing digitally native lifestyle brand that broadens our access to younger predominantly female consumers and really helps expand our presence in the higher growth lifestyle bag categories and importantly strengthens our own digital capabilities in the business. and a business that's coming with a really terrific management team I'll cover a little later in the deck. So we're excited about that. All of these areas that we're focused on, particularly the pillars, are driving resilient first half performance. When I think about our performance, excluding Middle East and India, and we're all dealing with the conflict in the Middle East, our first half sales on a reported basis are up 3.1% and on a constant currency base up just shy of 1% despite the headwinds. In Q2, the underlying net sales, and importantly, Q2 is the first quarter that we have the full impact of the conflict. Our business continued to be resilient, so excluding the Middle East and India, our business is largely flat. As we navigate softening travel demand and some softening consumer sentiment, really off the back of the inflationary impacts, particularly in the US, and I'll cover that in more detail as we go through the region. Our margin continues to expand. Our gross margin on a reported basis for the first half is 60.5%. Up from 59.2. But in that number, we have some tariff refunds that came in for a lot of companies. If I exclude that, we're still up 30 basis points year over year for the half, 59.5. And I would say an improving trend as we go into Q2. Again, reported Q2, 62% versus 59 last year. But excluding the tariff refund, our gross margins are 60% up 100 basis points. to the last year, driven by some favorable sales mix as Asia's moving, the underlying Asia business is moving well, and discipline execution across our businesses and all of our brands. As we signaled, we delivered sequential improvement in the adjusted EBITDA margin. Importantly, for Q2, our EBITDA margin on a reported basis is 16.1. If I take the tariff out, the EBITDA margin is 14.1. Up 100 basis points to last quarter, so sequential improvement. And that's despite 150 basis point increase in advertising. So we're pushing the business, we're leaning in on our pillars of growth, and we're delivering operating leverage within our EBITDA margin. That should continue really strongly in the back half of the year. On slide seven, our core brand performance reflects underlying strength despite a full quarter of headwinds. You can see our Samsonite business and the call-out boxes on the top are excluding the impact of Middle East and India. So we're down slightly for Samsonite, 1% with the headwinds we've talked about. I think that's a very strong result. To me, a little less, just down just shy of a half a point. Across the globe, that's really off the back of growth in Asia, really strong growth in Latin America. but a more subdued North America and a bit more subdued Europe down North America down around 5% and Europe down around 2% really off the back of the headwinds that we're seeing from the conflict. Luciano's been on board for three months doing a great job as he kind of starts to reset the Tumi business particularly in North America we're focused on enhancing the D2C experience. We're prioritizing product innovations that support full price selling for this brand. and we're strengthening the brand storytelling and consumer engagement. All this will have benefits as we move into the back half of the year, but importantly, as we set up 27 for a strong to the result. And then American Tourists are underlying trends have been improving for the last four quarters. If you take out the Middle East, you can see for Q2, we're up 6.2%. With strong growth in North America, a little bit of timing of orders being placed with the wholesale customers. and growth in Europe. Asia, if I adjust for Middle East and India, delivering growth of 3.5%. So the American tourism business has kind of moved into a trend that's more positive than when we were exiting 2025. On page eight, we have stable performance in geographies not directly involved in the Middle East. I have a whole section on Asia following this, but I just want to give you a sense for what we're seeing and where you see impacts of conflict. And so in Asia particularly, You can see the impact of Middle East and India, but the call out box talk about the underlying trend. You see three quarters of sequential improvement in overall Asia, excluding Middle East and India. You can really see the impacts in North America on the inflationary pressures due to the conflict. Softer travel demand we've started to see in North America and some weaker consumer confidence off of inflation off of a year of tariff followed by a year of real inflation from the conflict. and we've seen some more cautious purchasing from our wholesale customers. That's driving much of the North America dip that we've seen in Q2. Europe's been stable is what I would say. Our business is roughly flat for the quarter. It's been running roughly up 1% for the last couple of quarters and it really speaks to the underlying strength in the business despite the headwinds that we're seeing. And we're really seeing pressure in Europe is softening retail traffic. Our wholesale business has held up and our e-comm channels have been very strong within Europe. And Latin America continues to deliver positive growth. We saw a little bit of a softer traffic trend in Brazil and Chile, but our Mexico business continues to be positive and our outlook for the back half of the year is positive for Latin America as well. The next two slides I wanted to break Asia down because we have really strong underlying momentum in Asia. And I wanted to call out the countries that are really driving some strong results. So the first column is Asia excluding Middle East and India. So you can see we've had four really strong consecutive quarters of growth and that's continued into Q2. China has been very strong. Our business, as we kind of execute against our strategies, we execute against a digital econ channel that's outperforming, probably the strongest pocket of econ growth in our overall business. You can see our China business up close to 9% growth in Q2, and really strong momentum continuing in that business. Across all brands, particularly brand Samsonite, very strong, and Gregory, I'll cover in a slide, really capturing a good moment within our China business. South Korea's been strong. This is, again, four really strong consecutive quarters, and it continues, and it's across all of our brands and channels. We've seen very strong e-comm, TV home shopping, We launched a very successful American Tourist Lifestyle Bag Collection that's delivering for us and a Samsonite Red Collection that we've launched exclusive on Musinsa, which is really a fashion-forward digital channel that we're really executing well with that brand there, that sub-brand. Japan has held up well. We've seen consistent growth in Japan. A little bit softer in Q1 and Q2, really off of some reduced traffic from Chinese consumers, but the underlying Japanese business continues to deliver a strong growth profile. If you go to the next page, you can see the impact within the Middle East. So here you can see conflict starting in Q2, our Middle East business down 50%. So that's a huge impact as you'd expect. Our indie business was also directly impacted just from a consumer sentiment perspective. We shifted from double-digit growth last year to down around 8% to 10%. We expect that to improve a bit in the back half of the year. And we're managing that business well. Australia is a bit unique. Australia, you have consumer sentiment that's under strain. But Australians tend to travel to Europe through the Middle East. And I think with the disruption we've seen in the Middle East, we've seen a softer travel number in Australia as well. And then the last slide, it captures everything else, the rest of Asia. And here, four really strong quarters of sequential improvement. These are markets like Indonesia, Singapore, Thailand, Taiwan, all continuing to deliver growth. So the underlying kind of momentum taking out really the two countries that have been really impacted by conflict really speaks to an improving Asia story for us. The next section I'm going to go through the pillars and just a reminder, and I led with these, but we're really focused and the entire organization is focused on what are the pillars to help us drive long-term growth. This elevation and amplification of awareness for iconic brands, enhanced storytelling behind the business. I'll give you some examples of what we're doing there. Being the clear winner in digital across that whole ecosystem, we're winning here and we continue to push that and I'll talk you through what we're doing on that front. This white space opportunity in lifestyle bags really sees in the opportunity. In the last running call, I showed what the market size was and what our share is. And we have tremendous opportunity to gain share in this space. And we've had some really success, strong success across our brand there. And then we've got some really amazing product. We always have, but we've got products that are resonating globally and we're leaning behind from a marketing and messaging perspective to move the business. And here you have a picture of Parallax and I will talk you through what we're doing across brands from a product perspective. Importantly, we're continuing to advance our first two growth priorities with the global marketing and e-comm office that we've established. We're beginning to fill that team out a bit more. And our GMEO continues to establish as a key partner across the organization, helping to accelerate brand growth, strengthen our digital capabilities, and improve marketing efficiencies. We're driving consistent global brand execution through impactful storytelling. You'll see some examples in here, what we're doing there. that balances our global scale, but with local relevance. And that's really one of the powers of our businesses. We're touching consumers locally, but we're leveraging our global scale in a different way. We're working with teams and advisors like the Lions Advisory Group to help elevate our brand storytelling capabilities across all the regions. Chris is bringing people together to get everybody synchronized here. We're enhancing our digital marketing coordination by streamlining processes and improving speed to market by region. Harnessing the scale of our business to execute in a different way and accelerating our commerce capabilities across all digital channels, not just D2C digital. We're seeing great results there. And we're improving our marketing effectiveness through stronger ROI measurements, through greater transparency in the data and disciplined investment allocations. We continue to work with Deloitte on the MMM tools to drive efficient and effective spending. and I think the GMO is helping scale best practices globally across the business to harness the power of the consolidated business to drive long-term growth and portfolio. So that lays this foundation for pillar one and pillar two that we're leaning into. I'm on slide 13 and here's a good example of what we're talking about, elevating the Samsonite brand in China to target second half growth with a new brand ambassador, William Chan. William Chan's a leading singer, actor, entertainer with more than 20 million followers and he was appointed to brand ambassador for China really at the end of Q2. Just in the month of July, the campaign generated 42 and the campaign was around the Nexus collection that we've launched and we launched in China in the middle of Q2. In July, 42 million impressions, 5 million engagements. The strong consumer engagement translated into commercial results to Nexus collection ranked number two or number three in China best selling collections. and this is after just launching for six weeks in this market. The campaign also drove significant traffic and awareness across all of the digital platforms. So the halo effect of this launch really matters and it really speaks to our ability to continue and invest in culturally relevant brand ambassadors that enhance storytelling, engage consumer engagement and allow us to drive long-term brand growth that we can execute tactically within regions. So really a terrific success story. On page 14, this is looking at what we did with Nexus in Europe. So Nexus launched very strongly in Europe. This was a 360 campaign integrated across the entire region. It really speaks to Nexus as a flagship innovation platform. This is really next generation product for us that's driving really enhanced brand visibility and scale. We delivered a full 360 campaign out of home, premium retail environment, TV, social, digital, creator collaborations and content partnerships. And we leveled this multi-channel activation to really move the needle. And Nexus very quickly became a number two bestseller collection in Europe in Q2. And it really drove brand strength across the entire region. And this is just getting going because this is really launched in China as I said in the middle Q2 and Europe in Q2 and we're launching across the rest of the regions in Q3 and I expect a really strong result for Nexus. You won't be able to miss it if you're following or you're traveling. Our D2C Ecom business slide 15 was our fastest growing channel up 6.4% for the half. You can see our own D2C eCom in the charts below, went from 11% to 12%. We continue to move the needle there. And if we look at that whole ecosystem that I said at the start of my presentation, overall D2C eCom and the eRetailers that we can measure, so the likes of Amazon that we're measuring that business, is up 60 basis points, almost 21% of our business coming from these channels and driving a growth story across all regions. Our overall D2C business increased by 1.6%, benefiting from the focus on our D2C e-comm channels. Slide 16, our digital capabilities continue to drive consumer engagement across what I would label multi-channel growth. What makes us a bit unique is we can touch the entire ecosystem for digital. on our own direct consumer sites with wholesale partners that reach kind of global consumers and residents the likes of Macy's, Nordstrom's, our leading e-retails like the Amazons and MercadoLibre and many more that allow us to really play and scale across the entire ecosystem. Mobile platforms and really making sure that we're able to capture those consumers clearly there. We're playing that perfectly and more recently marketplaces and social commerce channels are gaining important growth and traction and we're focused there and I think Our ability to leverage scale to play against this entire ecosystem. We can touch the consumers where they want to be. And we're doing that well across all regions. And more to come. The GMEO is laser focused on how do we harness our scale to win here across all regions. We're accelerating digital leadership through strong e-commerce momentum in China. China really led the way here. Our D2C e-commerce business in China grew 14% in the first half. demonstrated this continued focus momentum in this market. We had exceptional performance in the Gregory brand in both D2C Ecom and retail within China, and our net sales more than tripled in quarter to 2026 to the previous year, highlighting the effectiveness of brand-led digital engagement and really targeting consumer activation in the category that's moving in China right now, and we're executing really well. Our D2C Ecom channel in China represents 22% of our sales in China. Chinese consumers have shifted here and we're capturing this really well. And as you know, our overall D2C e-commerce 12%. So China is leading the way on capturing consumer demand within these channels. And it continues to be a strategic, China continues to be a strategic priority to driving overall growth. And you can see that in the numbers I talked about for China in the second quarter. On our lifestyle bag positioning, I'm on page 18. This continued to grow, 2.4% growth. Importantly, as a percentage of our sales continues to grow, it's 37%, almost up 100 basis points to last year in this category. And it really speaks to what we're doing to focus on driving this category. I'll talk to you about what the initiatives are in a second. And it's coming across all of our brands, importantly. On page 19, what does it look like? What are we focused on? Just a couple of snippets here. When you think about brand stamps tonight, there's better than basic collection, a U.S. collection that's really delivered tremendous growth. Within Tumi, there's Tumi Alpha, which has luggage components, but a lot of what I call lifestyle bags, this brief pack, continuing to resonate really well with consumers. And American Tourist and Take to Cabin, performing in Europe really well as consumers shift to what they carry on to plane, and American Tourist is playing here. These hero collections are resonating across multi-channels and brands and consumer segments and our laser focus on optimizing our reach within this category is delivering. We're partnering with advisors to strengthen product development, merchandising, and go-market capabilities. We're bringing in advisors to look at globally and within regions how do we execute in this both from a product development side and distribution side to really make sure that we're maximizing our opportunity here. And we continue to evaluate opportunities, and the base acquisition is a good example of that. And I've been signaling there's opportunities here to expand how we execute in this space, and BASE delivers a really wonderful story within this space as well. Just a quick call out on Gregory. If you remember, this is a business we acquired, if you've been watching us long enough, more than 10 years ago. We acquired it with something like 25 million in sales. It'll be north of 100 million in sales next year. It's delivering overall growth 9.1% in the first half, led by Asia 15%, but growth in both North America and Europe. It's well positioned to capture this white space opportunity in lifestyle bags. both with performance and technical bags but as these bags shift off the mountain there's real opportunities to grow and we're seeing that across all of our regions. The outdoor and wellness trend in China has been tremendously explosive and we're capturing that really well as consumers are prioritizing travel exploration and experience-led spending. We're capturing that with tremendous momentum within China and I would say within Greater Asia and it's helping really reinforce the Gregory Grant positioning as a premium player but with the ability to capture consumers that are more lifestyle focused. And then on base, and for me, when I think about pillars in the context of pillars, base is delivering on pillar two and three. Our ability to win digitally, this is a brand that's done, I think, one of the most amazing jobs in this space, along with the ability to capture lifestyle bags and about half of this business is lifestyle bags. We entered in the agreement yesterday. As I said, it's really a fast-growing lifestyle and travel brand with a really loyal, engaged consumer following. This is a digitally native brand. It started eight years ago with an amazing leadership team that's created a differentiated luggage and lifestyle bags. Really authentic storytelling. I think it's one of the strengths. And I would label a best-in-class digital marketing e-commerce platform. We're excited about this. It has significant growth runway supported by Samsoni's global distribution, sourcing, innovation, and logistics capabilities. Imagine the brand which the team will continue to run. They'll continue to run this from Los Angeles, but they get the benefit of scale that Samsoni can bring in the background to help them kind of achieve their full potential. It's really led by a very strong and energized team. We've really got to enjoy Meeting and getting to know this team is led by Brand CEO Adila Hussein Johnson and a super talented team around her that's delivering. And importantly, a founder and somebody who will continue to be the head of creative and design, Shay Mitchell, who's really guided this brand's creative and product vision and will continue to do so under our watch and allow this brand to reach its full potential, both in North America, but I think there'll be opportunities to expand this brand against our international platform in a meaningful way. And then on pillar four, just continuing to win with products that matter. We've always been here. This is a business that makes products, but we're focused in a different way here to make sure that we're getting the full scale and benefit of products that touch consumers across the globe. We're leading the future with innovation and sustainability, over 115 year legacy of real innovation. Nexus is a good example of what comes to bear when we're able to do this. We're focused on lighter, more flexible, durable, and sustainable materials. We're doing this at a scale that nobody in the industry can to really bring next generation products. This focus on centralized product and marketing coordination, GMEO, enabling global consistency will continue to move the needle for us. And then, as I said, broaden the assortment to adjacent categories of lifestyle bags. We have real opportunity to win here with products that touch the globe in a more meaningful way. Just a few examples. Samsonite Parallax continues to build. It was so strong as we launched this at the end of 2025 that we're chasing inventory. We're back into a full inventory position as we get to the end of Q2 and as we lean into Q3. This has become a number two bestseller collection in the first half of 2026 as a collection. And we're launching new colorways. This dusty pink and blue fog is recently launching and off to a really strong start. and this is a collection that has won Red Dot Awards. It's innovative, it's sustainable, it's a really good story and it's resonating importantly with consumers across the globe. Page 24, we're about to launch a color that I think is amazing. This is a luxurious colorway and it's a wow when you see it in person. It's tagline we've brewed for the bold. This is a really exciting colorway extension for this collection. and I think continues to elevate brand Samsonite in a meaningful way. And this will be launching in the fall of this year. I've covered Nexus a lot. You saw some of the marketing messaging, but there's something really unique about this product. It's really, I would label next generation of premium innovation and shows what we're capable of doing as a company. It's a differentiated product using our rock skin technology, which is ultra lightweight, ultra durable and resilient product. It features silenced suspension wheels, things that consumers are watching for. It's organized packing. It's delivering a different experience when you travel with this product. It's got this tremendous value proposition. It's got sustainable materials. It's got the advanced security features. And it is resonating with consumers. This is another one, wow, when you get it in front of you. And there's more to come. For the markets that we've launched and leaned in, it's delivered. It's moved into top five collection worldwide. And we haven't really launched it yet in North America and the rest of Asia and Latin America. So there's a lot to come with this collection as we move in the back half of the year. And then on slide 26, the Alpha 4, the TUMI Alpha is the collection that kind of put TUMI on the map and it continues to deliver. It's a number one collection across all regions. Obviously number one collection for TUMI overall. This was a relaunch with premium materials, elevated functionality, innovation designed for today's traveler and this continues to move and it really reinforces Tumi's ability to consistently develop products that resonate globally while supporting its premium positioning and long-term growth aspiration. And it's been a tremendous success from a launch perspective. So that hopefully you can feel the things that we're doing to push the business and how they're helping us deliver resilient sales. I'm going to hand off to Tom for a financial overview and then I'll come back for an outlook at the end.

Thank you, Kyle. And hello, everyone. I am starting on slide 28. We're pleased to report solid momentum in our margins, and I'll talk about these margins excluding the benefit of U.S. tariff refunds. We had disciplined execution in the second quarter that drove higher profitability relative to the first quarter, and along with our scale advantages, this enabled us to invest in our long-term growth. Recall that last quarter we said relative to Q1 2026, we expected Q2 2026 adjusted EBITDA margin to improve over the course of the year. and that happened. This was driven by 100 basis point improvement in gross margin relative to Q1 as we successfully managed cost increases supported by favorable geographic and channel mix as Kyle referenced earlier. At the same time, we invested in our key growth pillars to amplify and elevate awareness of our iconic brands ahead of the summer travel season and to be the clear winner in digital. Accordingly, marketing Spend as a percentage of net sales increased by 150 basis points in Q2 relative to Q1 at 7.2% of net sales. This included flexing our marketing spend down just a little bit versus what we were planning to do in light of the continued headwinds on our net sales while still leaning in a bit. Distribution and G&A expenses as a percentage of net sales fell by 120 basis points relative to Q1, reflecting disciplined cost management, as we mentioned, and operating leverage from a seasonally higher net sales base. This led to 100 basis points sequential increase in adjusted EBITDA margin relative to Q1, and we expect this momentum to continue into the back half of the year. On slide 29, where I'll now discuss our Q2 results relative to last year, and again, I will reference margins that exclude the benefit from U.S. tariff refunds. In Q2, reported net sales fell by 1.6%, or by 1.7% on a constant currency basis due largely to impacts from the Middle East conflict, which were more significant than we expected our Q1 outlook. It's been five and a half months of the conflict. Recall that we assumed the impacts would not materially worsen relative to what we had seen through early May, as it was very difficult to predict what would happen one way or another. But as Kyle mentioned, consumer confidence and air travel demand softened in Q2, particularly in the US which impacted our net sales. That said, underlying performance was resilient and Kyle referenced that earlier. Excluding the Middle East and India, reported net sales were up 0.6% and constant currency net sales were approximately flat in Q2, down 0.2%. North America, however, experienced a more significant constant currency net sales decrease from Q1 to Q2, due to softening in both consumer confidence and air travel relative to other regions, as well as cautious buying by wholesale customers. First margin was 60% in the quarter, reflecting disciplined execution supported by favorable geographic and channel mix, as mentioned. As we look forward, there are still some uncertainties in the cost environment due to the conflict in the Middle East, but we are well positioned to continue to manage them well. We have forward-bought inventory We are re-engineering products to reduce costs and we are evaluating pricing actions that are appropriate. We continue to feel confident that we will maintain our strong gross margin profile for the remainder of 2026. Marketing expenses as a percentage of net sales were 7.2% in the quarter, which was up 70 basis points from the same period in the prior year. As we invested in marketing to elevate our iconic brand, enhance the storytelling and support importantly, Our distribution expenses were 33.6% of net sales in Q2, an increase of 200 basis points from the same period in the prior year, which is similar to what we experienced in Q1. The increase was mainly due to continued pressure from inflation, selected new store openings, and higher outbound freight costs on slightly lower net sales versus Q2 of 25. G&A expenses were 7% of net sales in Q2, an increase of 90 basis points in the second quarter of 2025. The increase was primarily due to increased professional fees, salaries, and benefits, and cloud-based ERP system implementation costs. Overall, we're managing costs with discipline as we invest for future growth and operating leverage expansion. We remain focused on investments in marketing, Expanded Digital Capabilities, Lifestyle Bag Growth Initiatives, and Global Product Innovation, along with Selective Store Openings, all of which are key to securing long-term brand growth opportunities, as Kyle mentioned in his presentation. Looking forward, we continue to focus on offsetting cost pressures through productivity gain and tighter control of discretionary spend. Adjusted EBITDA margin was 14.1% in the second quarter, down from 16.3% during the second quarter of 25, reflecting continued investment across our strategic growth pillars, as mentioned. Looking forward, these investments position us to improve net sales growth as we enter seasonally high net sales periods and help drive improved operating leverage relative to Q2. As a result, we continue to expect adjusted EBITDA margin levels to sequentially improve, excluding the benefit from the second quarter U.S. tariff refund. On slide 30 now, we show our first half 26 results. Similar to what we just walked through on Q2's performance, we made great progress on advancing our growth pillars, which enabled us to deliver resilient underlying net sales performance in light of softening consumer confidence in air travel due in part to the conflict in the Middle East. Excluding the Middle East and India, net sales were up 3.1% or 0.7% on a constant currency basis. We expanded our gross margin while investing in marketing and our strategic growth initiatives. We expect EBITDA margin improvement to continue in the second half of 26. Now going to slide 31, our balance sheet remained healthy with a net debt position of about $1.069 billion at the end of Q2. which is a decrease in debt of approximately $30 million from the end of 2025. Our total net leverage ratio was 1.8 and we had a strong liquidity of approximately $1.5 billion as of June 30, 2026. We also continued to invest in our long-term growth with capital expenditures of $19 million in Q2, which was in line with the second quarter of 2025. We continue to enhance our distribution center in Europe, which will support future growth, especially in e-commerce. We delivered strong adjusted free cash flow of $58 million in Q2, an improvement of $5 million from the same period in 2025. Our healthy balance sheet enabled us to return cash to shareholders, paying a $140 million dividend on July 15, 2026. And we also completed a $50 million share repurchase in mid-June. This reflected disciplined capital allocation. And speaking of capital allocation, I just want to add a few additional comments on the BASE acquisition. As Kyle mentioned, we're extremely excited to add this amazing brand to our portfolio. BASE has delivered rapid profitable growth, generating $210 million in net sales in 2025 at attractive margins. The acquisition is expected to be broadly neutral to our consolidated profitability with additional margin improvement opportunities in supply chain and logistics as this comes into the Samsonite platform as Kyle mentioned over time. We also expect it to enhance our overall net sales growth profile and there will be continued sales growth for the brand in 2026 under our watch when the deal closes. The transaction's enterprise value will be $210 million and will be purchasing 85% of the business. Shay Mitchell, founder and head of creatives and design, will retain half of her ownership in the business and continue to inspire the brand to grow to the next level. We expect the closing Q4 of 2026 subject to the receipt of regulatory approvals and other customary closing conditions. In summary, Our business has been resilient in a challenging demand and cost environment and we've been able to deliver stable underlying net sales performance along with gross margin expansion. We invested in our long-term growth and will be able to continue to do so as our adjusted EBITDA margin profile also improves from these levels. We improved adjusted free cash flow and our healthy balance sheet allowed us to return sizable amounts of cash to shareholders. As a result, We believe we are well positioned to successfully execute the near-term challenges and accelerate growth over the long term as we continue to execute on our key growth pillars. I'll now turn it back to Kyle for the outlook. Okay, great.

Thanks, Tom. Outlook, I'm on page 33. I'll go through this and we'll open up for questions after. So from an outward perspective, when I think about constant currency growth, I'm going to focus in on Q3. I think Q3 will remain stable and be in a similar range to what we saw in Q2 as the conflict continues. Although the situation in the Middle East remains fluid, we expect continued progress on our key growth pillars that we spend a lot of time talking about on this call, which has and will continue to enable us to navigate the pressures and continue to deliver resilient underlying net sales growth. We believe that our scale advantages and our relationship with suppliers and the actions we take to navigate macro conditions and inflationary pressures will allow us to continue to maintain the gross margin profile. We have a very strong track record of delivering gross margin profile. And even in this environment, we've been able to step up our gross margin. So I'm highly confident on that front. We're going to continue to invest behind our brands. We're investing in marketing. For the full year, you should expect us to spend around 6.5%. on marketing and advertising spend, which is allowing us to derive much of the pillars that we've talked about today. Reloads the second quarter and we look at EBITDA margin and excluding the tariff, you should expect us to continue as Tom just covered, adjusting the EBITDA margin expansion from a margin perspective in the back half of the year, just as you saw in Q2 of this year. As we navigate As we manage cost structure in the business and we go into a seasonally stronger back half of the year selling period, our EBITDA margin will continue to step up. As Tom just finished, we remain focused on a disciplined approach to capital allocation, commitment to returning cash to shareholders through dividends and opportunities like share repurchases, and smartly investing behind the business to deliver long-term growth. From a listing perspective, we continue to be in a ready position and we continue to closely monitor the macroeconomic and market conditions. In light of our view of improvement in our business, we intend to complete a dual listing in 2026 if conditions improve. We need some conditions to improve a bit on trading, but also the backdrop of the conflict I think really is a factor for us as we watch. But what I would say is we're ready to go when we see the window. And lastly, we continue to be confident in the long-term tailwinds that support our business. including continued growth and travel demand as well as the ability to execute our strategic priorities to accelerate growth. Hopefully you're feeling that from our presentation. We've added in this deck, and we're not gonna cover it today, but we've added in this deck additional context that really speak to the long-term tailwind supporting our business, the scale advantages that we have as a business that we're leaning into. You can feel the things that we're pushing in this business speak to leveraging scale advantage and the growth pillars that we're focused on to drive long-term growth in the business supported by a tailwind in the industry that I think continues to look bright. And to sum it up, I think our underlying net sales growth were resilient in Q2 and we expect to remain stable in Q3 despite many unknowns and the impacts from the demand from the conflict. Our gross margin expanded and our EBITDA margins sequentially improved in the quarter. We're highly focused on actions to leverage our competitive advantages and scale. to enable us to deliver a strong and improving margin profile in the back half of the year. We're highly confident on that. And hopefully you can feel we're playing an offense again and driving this business, investing both organically and inorganically to drive long-term profitable growth. We're focused on progressing our key pillars, which has resulted in durable organic performance in the first half. The base acquisition will expand our demographic reach within North America, aligns closely with our growth pillars, Through its strong lifestyle bag portfolio and digital capabilities, and I might add a really strong leadership team that will continue to drive this business. And it will add more than $210 million of our sales to our business with an attractive growth profile and a margin profile that will just continue to add to ours. In closing, our teams have demonstrated year after year they are nimble, and Steadfast, regardless of the environment. And for me, it was in full display in the first half of this year as we navigated a business with headwinds around us to deliver what I would label a strong result considering headwinds. This is what gives me the confidence that the investments we're making and the push that we have against our pillars will continue to bear fruit and position us for an accelerated long-term growth story and continue to generate shareholder value as we move forward with this business. So with that, I'll open it back up for questions. Thanks, everybody. Thank you, Kyle and Tom. Before we move into Q&A, we ask that you limit yourself to one question and one follow up in the interest of time.

Operator, we can go into Q&A now. Operator, are you there? The first question comes from the line of Dustin Wei of Modern Stanley. Your line is open. Please go ahead. Hey, Dustin.

Thanks. Yeah, thanks for taking my question. The first question related to Tumi, like with the new Tumi management team on board, like anything that you or management see sort of either lower-hanging fruits or something to improve for the brand, especially for the U.S.? Like we have seen the headwind to the overall U.S. market for Quite some quarters already, you know, noted the macro headwind, which is still like, you know, like to me is really having the potential in globally and in the US. And second question is, you know, on base, the congratulations on the deal. So, like, how do you plan to scale up, you know, the base sales, I think, versus like 10 years ago, you know, company also acquired a number of sort of smaller to medium sized brand. What makes you think that this time could be different and really make BASE sort of another maybe four largest brands in the portfolio? And would there be any other sort of acquisition in the pipeline? Thank you.

Okay. I think Luciano is doing a great job settling Tumi in. And in many ways, we're in the midst of a reset with this brand. And I covered it a bit when I was on the Tumi slide. It was focused on DTC Execution. The need to kind of continue to invest behind elevating kind of the awareness for this brand, its real potential is around broadening awareness. And I would say the tactical execution of driving that business with products that continue to elevate its positioning. Luciano is in the midst of resetting some of the team members. He's been on for three months. I think he's doing a great job. And I have Full view to what I think to these full potentials that hasn't changed. I think we continue to have an ability to double this business over the next six, seven years as we continue to drive growth. It's delivering growth in Asia to delivering growth in Europe. And the US is feeling the same headwinds that I think the overall US markets feeling. So I think, you know, in that backdrop, I think it's a moment in time versus I think it's long term potential. And I still have full visibility. I think Luciano is highly engaged and I.M. on what's TUMI's full potential. From a BASE perspective, BASE has got many things going for it. One, the underlying growth in the US market I think just continues to be an opportunity. That's where we'll be focused as we settle this business in and get it going. It'll get the benefit of scale from us from a sourcing logistics infrastructure piece. That was all outsourced by the owner of BASE that was providing the back office structure. This team will get energized off of what it can get from the scale of Samsonite while still running and driving the business within the core team there that I think is amazing. The real additional growth drivers for BASE is how do we target countries that make sense? I think we'll be careful with that. We'll still be evaluating that, but it's international opportunities and BASE has visibility to it. But what will be different is they get scale of our structure to do that. And I think that'll provide medium and long-term growth for this business. What makes it amazing is it's got a good mix of lifestyle bags. It's got a terrific, very clear travel offering. It really plays in this digital ecosystem in a way that I think will have halo benefits, not just for the base business touching the rest of the world, but for our overall Samsonite business. So that knowledge transfer that can come both ways, I think will add fuel to not just base, but our overall business. And I think it's got tremendous opportunities. And I think we've done a lot of smaller deals over the year that have kind of not moved the needle, but this has got scale. This is a business that's moving. That's the 2005 numbers. The 2006 numbers will be bigger than what Tom talked about in his presentation. And so momentum, scale, and getting to leverage this organization will allow it to do some great things with a really, again, super strong leadership team. And the energy and the halo benefit that Shea brings to that brand, and she'll continue to be the head of creative and design, will continue to deliver a great story for this business. So we're very excited, and that team's very excited. And we'll close out in Q4. From an acquisition perspective, as I always say, Dustin, we're always evaluating and looking. There's nothing that we're cooking right now, but we have plenty of inbounds and reasons to continue to look. And we continue to look in the space around the adjacent category of lifestyle bags. I think there's opportunities there for us. But we'll be focused on what we've got in hand to make sure that's well vetted in here and moving as we move forward. So those are good questions, Dustin. Thank you.

That's great. Thank you so much.

One moment for our next question. Next question comes from the line of Anne Ling of Jefferies. Please go ahead.

Hi, management team. Thank you very much for taking my call. And my question is on the third quarter to date performance. If you can share with us a little bit of the update. I understand that third quarter you just mentioned that you expect that the self-level in local currency term will be more or less similar. But maybe you can give us a little bit more information Idea, you know, in terms of, or some color, in terms of like, you know, different markets performance, for example, like, you know, our markets in the North Asia, like, you know, still continue to do strong, very good growth. Markets like China, we have seen very bad weather, not sure whether this impact the sales so far. So how are you seeing like, you know, in different markets, how they are performing? Thank you.

What I would say, and I'll kind of stick to what I said for Q3, I think we're seeing a stable environment. So, and it really looks similar to what I just walked through for Q2 across Asia and across Europe. I think stable Europe, I think North America, I might say in the back have had some opportunities as wholesale customers inventories levels have come down. I think there'll be some opportunities in the back half of the year for North America, just from a timing perspective with wholesale customers that are buying cautiously. Within Asia, I think China's momentum and weather always has impacts, I would say across the world. The weather dynamics have been strange. You felt tremendous heat in Europe, which impacted inbound tourism. You have kind of the disruptions of weather in the US and really some amazing weather in Hong Kong and China, I think, with the storms that have come through and really record heat. But those aren't really enough to drive kind of a different story in the trend. I think the world kind of is adjusted to that. And so we still see a strong China. For Q3, the team is executing really well. Across all those channels, we continue to see momentum. As the conflict wears on, I think it continues to weigh on consumer sentiments. But that's why I'm guiding, I think, a stable situation for Q3 versus Q2. So not so different than what we just walked through is what I would say.

OK, thank you. Thank you, Kyle.

Yep. Thank you for the question.

One moment for our next question. Our next question comes from the line of Carol Xia of Daiwa. Please go ahead, your line is open.

Hi, thanks management for taking my question. So firstly, you mentioned that you will keep looking for opportunities in the lifestyle brands for M&A's and then I want to ask like for our existing brands like Tumi, Samsonite, American Torture, like Gregory, What are the key drivers to drive the lifestyle part of our existing brands, and which brands do you think have more opportunities of exposure to the lifestyle? And secondly, I want to follow up on your cash usage priorities, like for M&A, reducing debt, dividends, and buyback, which are your priorities? Thank you.

Okay, from a brand perspective, I think all of our brands have opportunities to expand here. And when we look at, I gave some examples when I was on that page of what that looks like for brands, like the collection that I covered, this Better Than Basics bag in North America. And if you've been following and you see the campaigns that we're putting behind that with Olivia Coppola on Chocolate Mob and what we're doing to move the needle, every one of our brands has opportunities. But when we really peel into the lifestyle bag, It's around creating products that resonate strongly within a region or across regions. It's around understanding the distribution channel and the way we message and allocating dollars to the messaging. So you're starting to see and feel us talk differently in our storytelling as it relates to lifestyle bags and our real ability to move the needle there across brands. But every brand is delivering. The growth that you've seen in the last five quarters in our lifestyle bag business is coming from our core brands. and they will continue to deliver. So I think that's the way I think about it in every ground. We're about to launch in the U.S. a non-travel or lifestyle bag collection for American tourists which we haven't had in the U.S. yet. Learning off of what we've been able to achieve in Europe, in Asia, the U.S. business leaning in on that. And that collection's been really well received. That'll sell digitally but importantly to our wholesale customers and tremendously successful. So there's a lot we can go at. We can deliver really strong underlying growth in the lifestyle bag business with our core brands. Acquisitions will just be some fuel for additional opportunities. Maybe getting into a consumer demographic like BASE is able to do that we're not able to get to quickly with our brands. Those are the things that we're thinking about from an acquisition perspective. But we'll continue to push our core. We'll clearly continue to push base and allow base to kind of get to the next level with some scale with us. And then we'll continue to evaluate. But again, as I said on Dustin's question, nothing kind of in the immediate future, but there's plenty of things that show up on our doorstep is what I would say. From a capital allocation perspective, we have a long history of returning cash to shareholders. I think that's an interesting piece of our story. This is a tremendously strong cash generating business with a really asset-light model. So the amount of capex we need to push this business, we can convert a lot of cash to the ability to invest in the business. So you can see it's leaning in on the investment side while still delivering operating leverage. But you should expect us to continue to return cash to shareholders through dividends. Share Buyback's been interesting. We've been opportunistically buying back. I think as we get to a U.S. listing, you'll probably see Share Buyback work into a rhythm for us. I think it makes sense in this marketplace. And acquisition, are part of our strategy, but they're not drivers of our strategy. So we'll always evaluate an acquisition to make sure it lines up with our pillars of growth and strategic priorities. And we'll lean in there as well. And we have capacity to do all of that. This business has a long history of, again, generating cash. And we can do all three of those pieces from an allocation perspective and still be in a liquidity position that's tremendous.

And I would just add, Kyle, that Carol, thank you for your question on the capital allocation. Of course, when we look at acquisitions, besides all of the things that Kyle mentioned that are strategic and lined up with our long-term growth pillars, we'll also look at the financial profile of it, and we evaluate that thoroughly to make sure it lines up also with our long-term objectives of optimizing returns.

Okay, Carol. Thank you.

Yes. Thank you so much, Kyle and Thomas. Thank you so much.

Thanks. One moment for our next question. Our next question comes from Perry Yeung of UBS. Your line is open. Please go ahead.

Thank you very much. And I just got two questions. One is related to the economics of Bayes. You mentioned it is a fast-growing brand and it's going to penetrate a segment where we have relatively low presence, which is a young female market. I'm curious in terms of the growth, For this brand, how does it look like historically and going forward, how should we expect organic growth for this brand? And secondly, your long-term growth drivers, really, because we've been undergoing Different kind of macro challenge and external challenges over the past few quarters. But going forward, organically, what are the growth drivers for Samsonite as a whole? And I guess, is it through channel expansion? Because you talk a lot on the multi-channel expansion. Is it through product? And can you also provide some sort of roadmap in terms of where we will be in the next few years? Thank you.

Okay, I'll jump in. I think the economics of BASE are tremendously strong. This is a business that we should expect some double digit growth. They have a track record for doing that. They're achieving that this year. What makes BASE really interesting as a digitally native brand, its profit profile is very strong. The way this management team executed delivering growth with a margin profile that allows it to be neutral to us. It comes in at a margin, earning a margin similar to our own business. and really able to invest behind its growth story is tremendous so I think that continues and I think as we kind of carefully broaden its reach internationally I think it'd be a really strong driver of us and importantly it's in this category of lifestyle bags that there are tremendous opportunities and these guys are hitting it out of the park on the product offerings The messaging, the collaborations they're doing, tremendously successful. So we'll be empowering that team to kind of run and continue to execute that story while bringing some scale to them. So I feel very strong about it. They're energized, and I think they've got a long runway for them. As far as long term growth drivers in business, I think when I point you to what we added to the back of the deck, because it talks about the underlying dynamics of the industry. The world's facing some headwinds and some turbulence today, but the underlying growth drivers of travel fuel our business. And travel has a historic trend of growing at close to 4%. And we've outpaced that growth when you look at our historical growth trend. We've been in a weird moment with tariffs last year and then a conflict this year, but there's no reason why we don't correlate to that underlying growth in travel. And we're the industry leader. And so how do we Thank you very much. We need to invest behind the iconic brands that we have, so that lean in with GMEO and being more effective on our marketing is a growth valve for us. To gain more consumer awareness, brand stamps on it has high, high awareness, but other brands in our portfolio have tremendous rooms to grow. and how do we continue to deliver products that resonate with really strong marketing that we continue to lean into that will continue to allow us to drive share. So underlying growth dynamics that are strong and then our desire to overachieve those dynamics because of our scale is the way to think about the drivers of our business. And I think our pillars help you understand kind of what we're focused on. They're all things that we have scale advantage to from product innovation to opportunities from a distributions perspective to be able to perfectly source and distribute products across the entire globe. Nobody has the scale that we have to do that. And when we leverage our investments against the pillars, we can continue to drive share gain. And so that's how we think about the business. I think organically, our historic trend of growth, there's no reason why we can't think that organically, get out of the headwinds, we can't do something similar to that. And then I think acquisition really allows us to do something a little more. Again, we're not an acquisition shop. You know, we're not sitting here lining up acquisitions, but when we see something that's strategic and lines up to the pillars of where we can win or where they give us the opportunity to expand in the space differently than maybe our core brands can, those are the things that are interesting to us. And I think we have a good history of showing that we're capable of doing those when we find the right acquisitions. So that's my view on that time. Do you want to add anything?

I was just going to add, Kyle, Perry, maybe you want to look at pages 50 and 51 of the deck. Kyle referenced it. That'll talk to a little bit of the long-term drivers of our business. And then slide 46 of the deck will show you the growth over the historical long-term. And so that's why we included that. So thank you for asking that question.

Thank you very much.

Thank you for the question. One moment for our next question. Our next question comes from Chris Gao from COSA. Your line is open. Please go ahead.

Hi. Hi. Thanks, Benjamin, for taking my question. I have two. So firstly, regarding the GP margin, we're very impressed on the GP margin resilience that you show in the second quarter of this year. So I just want to confirm with you that with regard to the raw material fluctuations linked with the oil price movements, So when do you expect to see the raw material price movement impacting your P&L? And do you have the confidence that you can actually pass over this fluctuation to the end customer? Or you have other ways to digest this part of the fluctuations? And my second question is regarding the tariff refund, which is also another strong help to the margin profile this quarter. So my question regarding this is about, do you need to in turn share the tariff refund to any of your upstream value chain who shared a tariff pressure before, like in the past year? If you need to share this refund to your upstream value chain, how will be the impact in the following quarters? Thank you.

Okay, I'll jump in and then Tom can fill in. On the gross profit margin, this has been one of our historic strengths and particularly coming out of COVID. Our ability to manage margin, and I think I'll use the word you used, impressed. We have real strong capabilities here. I think when we think about inflationary pressures, we're watching that. We often lead the industry as far as taking actions to ensure we maintain margins. We have multiple avenues. One, the scale of our relationship with our suppliers, with suppliers that I have personal connections with and the whole organization is deeply involved with. We work together to manage, and so we can manage that way. We have the ability to engineer products to hit margin profiles with some scale. We're in and out of these factories in such a way that we can be engineering to manage. And then there'll be some pressures. And I think importantly, we're navigating We can see pressures. We buy forward enough that we have time to react to it and we can take actions. And so some combination of working with suppliers, I would maybe label some modest price increases as we move into the end of the year and next year, really just to offset the pressures to deliver margins. But our teams are highly focused and we're running a little ahead of our own expectations and margins to speak to the strength of how we're managing that. I think that helps. you get a little bit of mix in the business that helps as well and so as we push the DDC piece that has a higher margin profile that helps move the needle a bit and as we focus on these globally resonating products and we're focused on products that are delivering those have margin profiles that are helpful as well so all of that leads to some real confidence in our ability to manage margin but we won't hesitate to take the right steps along the way to ensure that we manage that which is what you've been seeing from us for the last All the way coming out of pandemic, we've really over delivered on margin. So I'm highly confident there. From a tariff refund perspective, we're managing that. We've kind of managed what we booked in line with some of the thinking around the question around where we are. But I might argue the tariff environment is still volatile. We just shifted from 19% to 10%. We're expecting the administration to do something different with tariffs, like a lot of companies that are navigating. So we've never taken our eye off The only other thing I would add, Chris, is that we recognize the net tariff refund.

In our reported results, and we spoke to, we spoke to results that excluded that refund. So we will continue to be transparent about that. But we don't, when Kyle spoke to the rest of the year gross margin profile, we don't have any tariff refund impact in there. This is completely organic. Yeah. Okay, great. That concludes our Q&A session.

I appreciate you for your interest and thank you for joining the call. Take care.

Thanks, everyone. Have a great day. That does conclude today's conference call. Thank you for your participation. You may now disconnect your line.