Last July's acquisition of Gregory Mountain Products from Black Diamond and its earlier takeover of High Sierra helped Samsonite to record a 25.1 percent currency-neutral increase in the revenues of its casual product category last year. In terms of dollars, the segment grew by 22.4 percent to $252.1 million.
Gregory contributed sales of $12.6 million after its takeover, which cost Samsonite $84 million in cash, but on a pro-forma basis, they reached $31.2 million for the full year. The less technical High Sierra brand of backpacks lifted its sales by 23.9 percent to $89.2 million for the year, with an increase of 24.9 percent in local currencies, thanks in part to wider distribution outside the U.S. Samsonite expects both brands to grow considerably in the future through expanding their distribution as well as their product range.
Samsonite, which took over the distribution of its products in Brazil last year, is taking advantage of its own international sales network for the moment to market the products of High Sierra rather than those of Gregory, which are more technical. It has helped High Sierra to enter new markets such as India and other Asian countries, where it generated sales of $11.7 million in 2014.
In its domestic U.S. market, High Sierra grew by 12.2 percent, but its sales in Latin America jumped by 127.8 percent. Its European launch resulted in sales of $1.9 million in 2014, but company officials expect them to rise to between $5 million and $10 million in 2015, with a strong performance at retail during the back-to-school period, especially in Germany and the Scandinavian countries.
Positioning it as a younger and cooler brand than Gregory for everyday use and for fun sports such as mountain biking, Samsonite intends to license the High Sierra brand for other outdoor products. At the Ispo Munich show last month, High Sierra launched a specific collection of backpacks for the European market, targeting sporting goods stores as well as luggage dealers and department stores. It also presented the first line of High Sierra apparel, accompanied by hats and socks.
On the other hand, in presenting its annual results, Samsonite says its strategy is to leverage its own marketing, sourcing and well-established distribution capabilities to further expand Gregory's business in the U.S. and significantly grow the brand internationally. It wants to replicate the success achieved by Gregory in Japan with its lifestyle products in other Asian markets.
The acquisition of High Sierra, Gregory and other less outdoor-oriented brands helped Samsonite to reduce the proportion of sales stemming from its core luggage business to 70.4 percent in 2014 from 74.4 percent in the previous year. The group is aiming to increase the contribution from its remaining non-travel operations, including the business segment and other accessories, to around 50 percent of total sales over the next five years. Samsonite has already indicated that it is open for other acquisitions in the outdoor sector.
Overall, Samsonite's sales grew by 15.4 percent last year to $2.35 billion, with an increase of 17.3 percent in constant currencies, but the core travel business rose by only 9.1 percent in dollars and 13.7 percent in local currencies to $1.65 billion. On a currency-neutral basis, total sales advanced by 11.9 without Gregory, Speck and Lipault, which were all acquired in the course of 2014, and they delivered a slightly improved gross margin of 53.7 percent.
Adjusted earnings before amortization (Ebitda) increased by 13.8 percent to $384.3 million, implying an Ebitda margin of 16.4 percent. Adjusted net income went up by 9.0 percent to $206.3 million, but it would have gone up by 13.9 percent excluding foreign exchange losses and stock option expenses.