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Samsonite CEO Tim Parker Talks Strategy

Executive credits the introduction of region-specific luggage as instrumental in helping the company’s sales reach a record $1.56 billion last year.

Talk about excess baggage.

Samsonite, one of the best-known luggage brands in the world, went through a rocky stretch a few years back, burdened by a giant overhead structure, weak marketing and a one-size-fits-all product plan for a worldwide audience.

But the company, which traces its roots to 1910 in Denver and is listed on the Hong Kong stock exchange, roared back at the hands of Tim Parker, who joined Samsonite as chief executive officer four years ago. Parker credits the introduction of region-specific luggage as instrumental in helping the company’s sales reach a record $1.56 billion last year. Now, it’s Asia where the company is focusing its energies. It’s Samsonite’s fastest-growing market, where this year alone, it has opened an additional 300 points of sale.

Parker talked strategy on a recent trip to New York.

WWD: What is the biggest change Samsonite has undergone since you joined the company in 2008?
Tim Parker:
First, we had to bring our break-even point down quickly because we simply weren’t making any money. We restructured our headquarters and reduced costs in all departments. We also put our American retail business into Chapter 11, which allowed us to restore that business so today we have the right type of stores — principally the outlets. A couple of months after I joined, [it] was virtually making no money at all on a monthly basis. [Now] sales are up. Sales were up 34.4 percent [year-over-year] to $1.65 billion for all brands in 2011 — and 2010 was a record year. We went from being in dire straits in 2008 to achieving the best results the company has ever achieved [just] two years later.

WWD: What do you attribute that to?
T.P.:
Several things. Besides cutting costs, we reinvested a large portion of the savings into marketing. The company marketing budget went from 4 percent to 8.5 percent, which made a major difference. The other big change is that we focused on developing products that were commercial in our marketplace. It’s important to recognize that before I came, the company was trying to execute a global product strategy so we sold the same products in each market — when the truth is that American tastes in luggage are different from European tastes.

WWD: How is it different? How are you tailoring product for different markets?
T.P.:
I encouraged each region — Asia, Europe and the U.S. — to develop its own products. That had a major impact because instead of trying to sell centrally imposed product design, suddenly we were developing designs that were appropriate for their markets.

Generally speaking, the European product is quite design-conscious and tends to be driven by stylistic trends. In America, the taste is for rugged luggage with big zippers. Asians want a more refined product that has a lot more smaller details than you would find in Europe.

One thing everyone wants is lightness. Europe and Asia were really focused on lightness but that’s now big in America, too. This is another area we developed — a range called Lift that’s been successful. It’s superlight, and launched a little over 18 months ago.

WWD: What’s your fastest-growing market?
T.P.:
The Asian market is growing rapidly. The Chinese are traveling a lot more. [But] it’s not just China — [there’s] huge business in Korea and India as well. Those markets have distinct characteristics. Our entry-level American Tourister brand is working well there. We can make our products accessible to people who have more disposable income, but can’t quite step up to buy Samsonite. So we operate two brands there.

[In 2011, the Asian market grew 48.1 percent from 2010.]

WWD: You’ve considerably increased POS in Asia. How so?
T.P.:
In Asia, we have a substantial distribution network, [consisting of] primarily our own stores, concessions in department stores or franchises. So most commonly, to buy luggage in China, you go to a department store and on the luggage floor you’ll find a shop-in-shop that has all the Samsonite pieces. That’s our main channel of distribution. We have American Tourister shop-in-shops as well and quite a large number of our own stores in Asia.