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Founded in 1910 in Denver, Colorado, Samsonite International SA (SEHK: 1910) is the world’s largest travel goods company. Its innovations in luggage, as well as other travel accessories and non-travel bags, have been one of its key reasons for its longevity.
More importantly for shareholders, management has set its sights on extending its remarkable run. Here are three strategies that its management is using to keep raking in the profits.
1. A multi-brand approach
The group has adopted a multi-brand approach in order to cater to a wider audience with different price points and needs.
The group acquired the Lipault, Speck, and Gregory brands in 2014 and then acquired Tumi Holdings Inc, a global premium lifestyle brand offering business bags, travel luggage and accessories.
The Tumi brand has helped to drive sales growth in Asia and Europe. In the first half of 2019, Tumi sales in Asia and Europe increased by 11.9% and 20.4% respectively.
2. Growing its direct-to-consumer channel
The group is also looking to increase the proportion of net sales from its direct-to-consumer channel. This will enable the company to realise higher gross margins on its net sales.
To do so, the group intends strategic expansion of its brick-and-mortar presence and to grow its e-commerce platform. The fruits of its labour were clearly seen in the first half of 2019 where direct-to-consumer e-commerce sales increased by 23.9%.
3. Increasing its product offering
The group is also investing in research and development to develop lighter and stronger materials for its products.
Samsonite has done a great job in this department in the past and recently released the Samsonite – Magnum, which is the lightest and strongest 3-point lock polypropylene suitcase on the market.
Foolish bottom line
Samsonite’s longevity in the highly competitive retail environment is something to behold. Although sales declined slightly in the first half of 2019, the company has put in place strategies that should see it return to growth in the future.
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Hong Kong contributor Jeremy Chia doesn't own shares in any companies mentioned.