Samsonite Group S.A. (HKG:1910)

Earnings Call: H2 2017

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Mar 15, 2018

Good morning, everyone. Welcome to the 2017 Final Results Announcement of Samsonite International S. A. I'm pleased to have today our Chairman, Mr. Tim Parker our CEO, Mr. Ramesh Tiwala and our CFO, Kyle Jindrog with us to present our results. And without further ado, I'll ask Tim to give some opening remarks. Thank you. Good. Thank you very much indeed, William, and a very warm welcome to everyone this morning. I think this must be the 7th year of our results following the IPO in 2011. And I'm very pleased to report another set of sparkling and record numbers. In 2017, the company actually grew by almost a quarter. A lot of that, of course, was thanks to the acquisition of Tumi, but we reached a record €3,500,000,000 in sales. Also helped by Tumi, the average margin, gross margin we earned increased slightly by a couple of percentage points. And together with control over costs, our EBITDA rose by 19.5%. And that was in spite of a very substantial increase in our advertising spend. So 2017 was very much a year where we decided to substantially up our investment. The total spend was just over $200,000,000 behind our brands. And we increased the investment by around $62,000,000 So this excellent result has been achieved in spite of a very substantial additional spend on advertising. The adjusted net income moved rather less and that was primarily due to the combined impacts of the increase in advertising investments and of course the interest costs associated with the Tumi investment. However, the underlying growth in the profit attributable to our equity holders rose by around 12%. So a very robust set of numbers. And I think I was cheered by the fact that 1 or 2 markets in Asia towards the end of last year where we've had perhaps less growth in the last few years, started to turn a corner. So we saw a good result in India. And even where we sit today in Hong Kong, after 2 or 3 years of pretty much being in the doldrums, Hong Kong has started to embark on a more positive trend as well. So 2017, the year of very successfully absorbing a very substantial acquisition of Tumi. It was also the year where we acquired Ebags in May, the leading e commerce business in our space in America. And I think the opportunities there in the future, will be very exciting indeed. And of course, 2018, as I'm sure Ramesh will mention in a moment, will be the year of Ronaldo. This is the first time that we have really had a very major personality behind one of our brands. I'm much happier dealing with sportsmen because generally they don't get into some of the slightly dodgy reputational issues that actors can get into. So, we think, Mr. Ronaldo will behave himself over the next year, I'm sure, and, score many, many goals. And a few of them may well be for Samsonite. So very pleased. And I think the overall outlook for this year looks quite encouraging. Of course, there's a slight shadow cast by the protectionist noises that are being emitted, on the other side of the Atlantic. But my feeling at the moment is that we are experiencing the most balanced and strong global conditions that we've seen in quite a few years. And that, of course, is very good for travel and tourism. So, we feel that the general sort of background 2018 is a good one. If we move on to the next slide, it's, I think, always instructive to remind us all of the very simple but effective model that we pursue in our business. We are specialists in our field, and essentially, we aim to have very strong brands behind which we put a substantial amount of advertising. So you can see that our spend, as I've just mentioned, increased substantially on the left hand side of this slide. We spent just over $200,000,000 That has led in turn to very encouraging growth results right around the regions of the world in which we operate. North America, up 35%, 3%, excluding the acquisitions Asia, up 16% Europe, 17%, 10% excluding Tumi And after 2 or 3 years of substantial investment in Latin America, we are beginning see the fruits of our endeavors, and we feel now very positive about prospects on that continent. And you can see that not only are we growing in all the regions, but all of our key brands have also experienced very robust growth. So Samsonite up 6%, Tumi 12%, American Tourister 6.5% and the other smaller brands doing well too. And of course, the acquisitions that we have made have shaped our business in quite a profound way too, so that you can see non travel products have performed especially well in 2017. Business category up 60%, casual up 20%, and our accessories business up by almost a quarter. And of course, the addition of eBags has moved quite substantially the dial in terms of e commerce. So e commerce now accounts for almost 14% of our business. And I'm sure Ramesh will touch on in a moment. We do see very exciting prospects there. And in addition to the e commerce sector of our business, which is growing fast, the business is now moving steadily in the direction of a much higher percentage being direct to consumer. So last year before, in 2016, that accounted for around 26% of our business. In 2017, that was up to around a third of our business, and it will continue to grow as we open more stores and invest more heavily behind e commerce. So all of these things together, I think, as I've said in the past, have created and under Ramesh's leadership have created a very diverse business, well positioned in all the price points and segments of the market and equipped, I think, to make some more further progress in 2018. So, without much more ado, I'll hand over to the leader of the team here, Ramesh. Good morning, everybody. As Tim rightly said, 2017 was a very satisfying year for us for a variety of reasons. Most of them have been very well enumerated by Tim. On Slide 6, we look at it, we try to create a bridge for you between the sales net sales from 2016 to 2017. So the major contribution came about from Tumi, which is the Tumi sales for the full year period, the growing of Tumi and eBags and the core business. So you look at it, our core business excluding Tumi in North America grew by 3.3% and Asia by 4.8%, Europe had a stronger growth of 10.5% and Latin America 18.6%. So overall, the core business excluding to me and contribution from Ebags on a constant currency basis, the net sales grew by 6.3%. Incremental net sales of $387,400,000 came from Tumi with $346,600,000 was incremental sale from January to July, which were not there in our last year numbers. But very important for us to look at it, the constant currency growth during our tenure that is from August to December, the business grew by 14.5%. The currency translation had a positive impact this year or last year of around 24,300,000 which has been shown as the last bar on the same slide. Similarly, the growth in adjusted net income, again, we try to create a bridge for you. Last year, the adjusted net income was 257,000,000 and when you look at it, the growth of adjusted net income on our core business that is excluding to me and additional advertising was around 26,200,000. Additional advertising spend was around 31.7 percent 31,700,000. Dollars This is net of the impact of taxes. The growth of Tumi August to December period, the additional growth was brought in about $13,200,000 and the full year impact of January to July period that was $24,400,000 and the change in interest rate of 29,500,000. That is the reason why you see that the net profit adjusted net profit has been more or less flat versus last year. Just to add, on Tumi, when we talked about Tumi, when we're doing the acquisition, we talked about getting to accretive net income in the 1st full year. And this clearly shows that. So we're quite happy with this result when you look at net income, including the impact, the year over year impact of additional interest, we get to an accretive net income for Tumi for the full year operating. So we're very happy with that. Coming to Slide number 8, these are the results excluding Tumi. Probably this will be the last year when we will be showing the excluding Tumi numbers. Going forward in 2018 onwards, we will present Tumi number similar to how we present our other brands. But we felt that and this was last year was the 1st full year of Tumi that we will show you and give you more visibility into Tumi and Tumi number separately. So Slide 8 shows the business, the core business without Tumi operations. Net sales grew by 10.6%, but if you exclude eBags out of that, the net sales grew by around 6.3%. The gross margin on the core business grew by 70 basis points from 53 to 57 53.7, largely on account of slightly bigger portion of direct to consumer sales, but also benefited by lower freight in cost and some other lower operational cost that has been incurred during the year. The advertising spend has been substantially increased from 4.9% to 5.9%. Going forward, you have to look at it that our A and P spend will remain in the similar zone. 5.5% 6% is a zone which you should look at it, our business would remain at that kind of a zone. In last 2 years, we have been year on year. We've been increasing the A and P spend. We feel 5.5% to 6% is a stable run rate of advertising is what we will maintain going forward. As a result, the EBITDA has gone down from 16.6% to 15 point 6 percent which is most of it is on account of increased A and P spend. Yes, a little bit increase in gross margin is set off is setting off a little increase in SG and A as a result of higher retail operating expenses. When we open new retail stores, it take a good one, 1.5, 2 years before they start to become mature. So in the beginning, the SG and A as a percentage of sale is slightly higher. 2017 results for Tumi alone on a pro form a basis where we have taken the numbers of January to July from the previous management. On a constant currency basis, the sales grew by 12.6%. And if you peel down those numbers, there was a growth of around 8% in North America. I mean the constant currency growth was 8%, North America growing by 6.6%, Asia 12.4% and Europe 8%. The gross margin once again saw a significant improvement from 62.5% to 66.5%, which is 400 basis point improvement, which is on account of our strategy to make to me less promotional. Also a higher contribution from direct to consumer both online and offline sale, as well as there has been some cost benefits because of the synergies that we have accrued by combining the 2 businesses together at the back end of the business. During the same period, we also further dialed up the A and P spend from 4.7% to 5.7%. Again, to me going forward, the A and P will remain now in the same zone as where it is today, which is about 5.5% to 5.7% kind of number. So further dial up of A and P both on core business and to me won't be happening. Adjusted EBITDA as a result have increased from 20.2% to 21 percent, which is largely on account of improvement in the gross margin. Part of that has gone in dialing up the A and P spend and also part of it has gone in increasing the retail related costs. On slide number 10, Tumi net sales by region, this is on a pro form a basis for 2016. The constant currency growth of North America was 6.6%. The same store comp sales were around 1%. Asia, the constant currency growth was 33%. A big part of it is also happening because during the year, we took back some of the market from being a distributor run model to a directly operated model. But if you really peel that out then the constant currency growth was around 12.4%. Europe, the growth was 8%. I think Europe was in 2016 on a cleanup mode because we did find that there were quite a few doors in Europe, which we felt were brand inappropriate. So as a result, the numbers have been moderate. We believe going forward, Europe should be also back to solid double digit growth for Tumi as we start to expand the distribution with appropriate dose. North America to me driving significant increase in net sales and profitability. If you look at the total North America sales grew by 35.4 percent, because it has been helped by both Tumi as well as Ebags. If you peel both of them away then the North American business have grown by around 6%. But there has been an increase in the second half versus first half. When I look at the North American comp has been around 2.5 percent. And there again from first half to second half, we have seen that there has been some more improvement in the second half versus first half. There have been strong growth in the core brands. Samsung grew by 5.1%, American Rooster grew by 7.3%. Net sales in the wholesale channel grew by 1.8%, including 8.3% increase in sales to e retailers like Amazon. Direct to consumer net sales were up 77.7% year on year. Direct to consumer e commerce net sales grew by 3 37%, which was largely due to eBags in May, the retail chain. But if you exclude eBags, also the direct to consumer e commerce sale grew by around 11%. The retail channel growth was 4.9% and comp, as I said before, was 2.5%. We added 3 new doors in 2017. There was mixed performance among some of our non core brands. Specs still grew by 4.7%. We expected it to grow a little more than that. But because of late introduction of some of the new phone, especially iPhone X, some of the sales have moved from quarter 4 last year into quarter 1 this year. Hi, Sarah, they grew by 11.1% that was mainly on account of non recurrence of a backpack program with 1 of the key customer. Going forward, we believe Hysira should be also be able to deliver high single digit growth in 2018. Gregory grew by 9.9%, Hartman has degrown by 5% mainly on account of Hartman is also going through a reset. Lipo grew by 26.8%. In terms of the categories, all categories have shown strong growth, travel growing by 10.9%, casual growing by 45%, accessories by 18%. Of course, they all have been benefited by our acquisition of Ebags. Adjusted EBITDA margin went down from 16.5% to 16%, excluding Tumi. Adjusted EBITDA margin decreased by 140 basis points, driven mainly by 130 basis point increase in A and P spend and also eBag is profit dilutive at this stage, which is not something very unusual. Every time when we have bought a new brand, the brand in the beginning are profit dilutive, but we are confident that over the next handful of years, the brand can be navigated, our business can be navigated to deliver profitability very similar to our core business in that particular region. Asia had another strong net sales and profit growth supported by Tumi. The constant currency growth on sales was 16%, but excluding the impact of Tumi, the net sales grew by mid single digit. That's it was led by around China by 7.2%. Japan had a strong year 12.4%. India rebounds back in the second half, delivering 4.6% growth. Korea was still somewhat suffering because of lack of Chinese tourists there, was down 2.5% Excluding South Korea, Asia grew by 6.4% and excluding Tumi. Strong net sales growth of 9.9% in direct to consumer channel with retail sales grew by 5.1% coming from 16 new retail doors and a full year impact of 26 new net doors that those were added in 2016. Same store growth excluding Korea where the stores were still suffering was 0.4%. If you look at it last year, there were 2 major countries where we have still witnessed negative comp. 1 was Korea that was minus 11% and second one was Hong Kong, minus 8.7%. But when I look at it quarter 1 this year or year to date numbers that we have, China, Hong Kong definitely is back almost full blast. It's back to a positive comp and Korea at least have come to a flattish comp from being minus 11% in all of 20 17. Net sales growth in wholesale channel was 3.8%, including 37.8% growth in our sales to e retailers like Taobao, Tmall and Amazon. Samsung net sales grew by 3%. American Tourister finally could see a rebound. As you know that 2015 2016 first half American Tourister was witnessing a marginal degrowth. So if you look at it in the second half of twenty sixteen, American Tourister has been able to come back with mid single digit growth. And I'm very happy to let you know that year to date, Q1 number, American Tourister is back to double digit growth, thankfully to also our new advertising campaign, which is going on stream, which is featuring Ronaldo. Net sales of Kamiliant, which is one of the smaller brand which have been introduced in some part of Asia to cater to the entry segment of the market grew by 68.3%, contributing close to around $37,000,000 of sales. Lipo, this is a small brand, grew by 27%, Gregory by 22%, travel grew by 4.4% and casual bag grew by 10.5%. The small d growth of business of 0.8%, which is more on account of casual adjacent. So there are more and more business people start to carry backpack and we tend to classify our backpacks under the casual category. So there is I think it's really unfair to read the business category number in isolation of what happens in the casual category. EBITDA margin was down from 22.2% to 21.9%, which is about 30 basis points down, which is mainly on account of 90 basis point improvement in A and P spend. Europe was one of our let's say our hero region in 2017, delivered a very strong growth of 16.8% on a constant currency basis. Even excluding Tumi, the core business grew by 10.5%, driven by Russia 29.6%, Turkey 42.9%, Germany 7.7%, Italy 8.7%. So it was an overall strong growth across all major markets in Europe, barring a little bit of softness in U. K. For very obvious reasons. Retails were up strong 12.3% and very important, the comps were plus 6.9%. We did open 30 new stores in 2017 and there was also an impact of 6 retail stores which were opened in 2016. Direct to consumer e commerce also grew by 39.1%. Wholesale also grew by 8.3%, including 40.7% increase in the net sales to e retailers, mainly Amazon. Strong net sales growth in core brands, Samsonite grew by 9%, American Druster continues to fly high with about 24.8% growth. American Druster contribution to our sales of our European region have increased from 13.1% to 14.8% during the year and it continues to grow. Lippo net sales were roughly flat, which was on account of reset strategies that we're rolling out for Lippo in Europe, I'm sure in 2018, Lippo would be back to delivering strong growth. Gregory, which is a smaller brand, have grown by 30.3%. Travel category grew by 9.6%. Business and casual grew by 13.9% and 36 0.6% respectively. Accessories also grew by 8.2%. So Europe definitely was one market where there was a very all rounded growth. So every brand grew, every channel grew and every category grew. The EBITDA margin went down by 100 basis points. It was mainly on account of 200 basis point higher A and P spend during the year. Europe now also is around 6% of our A and P spend and going forward, practically all our regions now are in the zone where we would like to see them even on a going forward basis. So this continuous dial up of the A and P that we've been doing for last 2 or 3 years, you would find that going forward that dial up may not happen because we feel the current levels of our A and P spend is the right level we would like to maintain in the future. Latin America, as rightly said by Tim, our investment in both in terms of resource, the people resource and the money that we have been investing on our Latin America starts to bear fruit. The net sales grew by 18.6%, Brazil grew by 52%, Chile, which is a more matured market for us, grew by 9.7% and Mexico, which did had a little bit of ups and downs post the earthquake there, still could post a growth of around 11.4%. Very importantly, in Latin America has been our comp sales in Latin America grew by 13%, which is a very, very strong performance coming from practically all markets, there's Chile, Brazil, Mexico. The wholesale channels grew by 12.5%, which are mainly driven by Mexico, Argentina and Chile. Argentina is again another positive thing which is happening now in Latin America. There was a time when Argentina was our 2nd largest market, but then in the last couple of almost a decade, we can say it was completely destroyed. Thankfully to the new administration which is in place, we find that Argentina is now becoming an important market for us. And we are cautious. We are investing back into Argentina. But this time, we are more cautious. And but I'm personally very hopeful that Argentina would become very soon a very important market for Samsonite net sales grew by 21%, American Tourister grew by 34.9% And we have some of the local brands there, which are predominantly sold only in Latin America. We have a backpack brand called Extreme, which has also done extremely well, grew by 12.6%. It was previously only sold in Chile. During the year, we have extended the franchise of Extreme very successfully to other Latin American markets like Brazil, like Mexico, Colombia and Peru. Sex Align, which is our entry price point luggage brand mainly sold in Chile has now also been extended to Peru has grown by 11.1% and Secret, it's our women brand, which is largely sold only in Chile has grown by 7.5%. Travel grew by 21.8% and casual grew by 33.7%. Casual when they're right here, it's because of a very strong performance from back to school season, which is driven by the brand which is driven under the brand Extreme, has done extremely well. And the backpack category also grew by 19.8%. Adjusted net income grew by 180 basis points from 6% to 7.8%. This is what we have always talked about it. Once we invest the money there, it starts to get the scale advantage. I have no doubt that in next handful of years, Latin America profitability should also start to look very similar to the profitability of our business in other regions of the world. The gross margin increased even faster, but we also dialed up their A and P by around 110 basis points, yet their EBITDA margin went up by around 180 basis points. Look on Slide number 15, gives you an idea about some of the key markets. U. S. Grew by 16.6%, which is including which is also excluding Tumi, but including Ebax. But if I feel away Ebax, then the business grew by around 3%. China grew by 7.2%. These are all excluding Tumi numbers I'm telling you. Korea, which is still de grew by minus 2.5%. But as I said, when I look at our visibility into our business going forward, I think Korea is also anniversarying that drop off of Chinese tourists post implementation of the THAAD missile in Korea is coming in, in March. So we're all hopeful that quarter 2 onwards, Korea should be able to back to a more natural growth of mid to high teens mid to high single digit. Japan continued to grow do very well for us, grew 12.4%. Hong Kong, as you see here, is minus 1.5%. This is largely driven by the wholesale business. But when I look at again year to date numbers for the quarter 1, Hong Kong also seems to have there's a revival in Hong Kong. It has a strong comp sales and we see high single digit inching up to double digit growth in Hong Kong in quarter 1. India, in spite of the effect of demonetization and so many other macro correction with the government has been doing there is back to 4.6%. I would like to see that number to be more like high single digit in 2018. Germany 7.7 percent, likewise Italy, France, UK, most of the large countries have done well. Among the emerging markets, we had some very strong performance. Russia growing by 29.6%, you know Mexico 11.4%. Now if you look at Brazil 52%, Turkey 42.9%. So there were some very strong performers among our emerging countries and these are all numbers I've quoted you are excluding to me numbers. The next page shows you some of the slides of our retail expansion strategy. We have been selectively expanding our retail footprint in markets across the world. At the same time, we have also been very, very much focused on increasing the contribution from our own e commerce business. And you see the number here during the year 2017, our own e commerce business grew by 138 basis point 138 percent on a constant currency basis. On Slide 19, direct to consumer channel net sales accelerated with the acquisition of 2,000,000 Ebacs. If you look at the pie chart, in 2016, direct to consumer sales contribution, including retail and online was 26%, within that 4% was online. That has grown to 33%, about a third, 25% coming from brick and mortar and 8% coming from online. We are still holding our view that in next handful of years, we would like to see that number growing up to inching up to around 50% of our business. A bigger part of that growth will come from a bigger growth from the online channel, but we will also continue to expand selectively the retail footprint, especially in markets and especially for brands, which we believe are somewhat underrepresented. But I'm also put a little bit of a mark of caution here. The numbers we present here are somewhat becoming more and more cloudy because the line by which you divide what is online and offline is getting more and more blurred. We're also finding it increasingly difficult. It's an internal debate that we have. Maybe you may find that going forward, we'll start reporting to you D2C number instead of giving you a breakup between online and offline because the consumers sometimes are they're searching offline. They go to a store, they choose the product, but then they place the order online to be delivered at home or it could happen the other way around that they spend half an hour deciding what the product they want to buy, they come to a store, show you on their smartphone that this is what I want to buy and they go away. Now where do you book that sale as? So we start to find that is increasingly getting this whole omni channel or muddle channel between online and offline. So I don't know when we meet you next time you may find that we will be presenting you the number which talks about both these numbers put together. But both together also the business have been growing at a healthy clip of around 32.1%. Brand growth, we're very happy to see the all our brands have been growing very well. Samsonite, which is our flagship brand, during the year have grown by 6.1%. Europe has grown by 9%, North America 5.1%. Asia was somewhat moderate at 3%, mainly on account of some amount of slowdown that we have seen in Korea and in Hong Kong. These are 2 important markets. But if we really take that number out of Hong Kong and Korea, probably Samsonite also is more like a mid single digit growth. Latin America, which starts with a smaller base, grew during the same period by 21%. Tumi grew by 12.6% on a pro form a basis. The number here which you see on the pie chart, 145.3 percent is more because as we booked our numbers because January to July numbers were not there in our books, 20 16, but on a pro form a basis that growth is more like 12.6%. American Barista net sales grew by 6.5%. Europe grew by 12% to 24.8% as well as North America grew by 7.3%, Latin America by 34.9%. Asia still had an overall degrowth of minus 1.4%. But as I said that by the time we have come into quarter 2, more particularly into the second half and more particularly to quarter 4, we have seen a strong rebound and I have visibility into our numbers year to date in quarter 1. American Brewster is bang back to double digit growth, something like more like 12%, 15% kind of a growth. I have no doubt that going forward, American Rooster should also be able to deliver growth more in line with high single digit. It's very similar to what our other core brands are delivering. Spec overall grew by 4.6%. It was slightly lower than our own expectation. Those are mainly on account of delayed launch of iPhone 10 because we are very largely dependent here on introduction of devices. The delay of introduction of new devices definitely has a direct impact on our business there. Hi, Sarah. They grew as I already explained before mainly in U. S. Because part of the business last year was not repeated in 2017. But we believe in 2017, Hycyra should also be back to mid single digit kind of a growth. Gregory continues to grow double digit both in Asia and Europe as we expand the distribution footprint of Gregory. Gregory continues to grow at solid double digit. Camelon starts with a small base, which has grown very well at 68.4%, Lippo growing at 12.2%, etcetera. You want me to do eBags? Okay. So we acquired eBags in May of this year. And really when we think about eBags, it was our ability to quickly expand our presence, particularly in the U. S. Market initially online. Very similar to what we thought about with the Rolling Luggage acquisition a few years ago that some of you probably remember, we see an opportunity to use this platform to push a lot more of our own brands to the market through this channel. So when we acquired eBags, as Ramesh said earlier, it's profit dilutive. We bought a business that's doing around $170,000,000 in sales with very little profit, not that unusual for some online businesses. But we will quickly shift the mix of that business over the next 18 to 24 months so that the mix of this business will be a larger portion of our own brands and we'll bring this profit in line with our core business in North America in that same timeframe. It does provide a solid platform. A lot of what we're doing when we bought this was expertise within the teams of eBags. So as we look at expanding our own e commerce platforms, we picked up some really solid talent from a people perspective and also just understanding the platform and play in that marketplace and how you advertise and message to consumers online. So we're going for some of that there. I think we got it for a very good price. When I think about the price we paid for this to the revenue and our ability to quickly fix the profit, we were quite pleased with the price that we ended up here. And the integration is proceeding as planned. So everything is marching as we anticipated. We're getting pretty good at integrating these acquisitions. So as you can imagine, we're in the midst of converting their SAP system, getting their reporting kind of lined up into our reporting. And we're also evaluating how we mix the platforms of both eBags and our core business e commerce. All of that will continue to play out over the next 12 to 18 months as well. So we're quite happy. It will start to the profitability will start to creep up in 2018, but more like 2019 2020, you'll see this start to line up to the rest of our core business profitability. So and then it's a U. S. Based business. We're focused in the U. S. We do think there's some opportunities for the brand eBags and the concept of eBags outside of the U. S. That's more like next year and the year after as we settle the business down in the North America business. Thank you, Karl. On the next slides, as you look at it, these are just to give you a preview of a variety of products that we are selling across different geographies. Slide 24 have some of the views of the products, Tumi, some of the new introductions, 25 as some of our other brands, Lipo, Gregory. And as you know that we have launched a campaign of what we call internally as women first. We suddenly realize that the women category contribution to our entire sales today is very low. It's almost like low single digit. Whereas when we acquired the brand Tumi, Tumi has been somewhat ahead on the curve with their own women first strategy. So when I look at Tumi brand sales, the women category sales within Tumi brand, it's astonishingly it is anything between 18% to 22% in different parts of the world. So on a global average also it will come to around something like 21%, whereas for our rest of the brand is like 1%, 2% kind of number. So we are now getting more and more focused on that. And it would mean we have to think through it more carefully in terms of our product, in terms of the way we present our brand and the way we communicate our brand. It's not going to move the needle tomorrow. It's something like it's a 5, 10 year project. But if it can be done with to me, I'm sure there is an opportunity, a similar opportunity lies with the women bag opportunity. I'm not talking about a women handbags. We're talking about women bag with the women carry to their place of work, for the shopping and things like that everyday use bags, you know, some of the pictures that you see on Slide 26. You want to put this out to the latitude? And if you see on the Slide 25, it's 24 rather. 24, yes. Yes. On left hand side corner, you see this product. This is the 1st generation of product which have been launched under brand Toomey using Samsonite technology, it's called Latitude. It has been launched now in U. S. To a tremendous success. To the extent that our original plan was to launch it on a global basis, We had to scale down our launch. We had to delay our launch. It will be in a market in Asia somewhere in quarter 3 because what we had prepared in terms of our production plans, we were not able to catch up enough. We could not line up enough quantities which could allow us to feed credibly all different parts of the world. As a result, this product is in the market right now, mainly in North America and slowly we are rolling it out in Europe and by quarter 3 it will be in Asia. But I must say, it's a very good example of how we can leverage the strengths of both companies. Toomey has its own strength. When I look at the women first, which was on Slide 26, it's like how we are trying to leverage the strength of women to drive the Samsung women category because for Tumi, the women category makes up for 21% of the revenue. For us, it's less than 1%. Similarly, Tumi was always a nobody in the hard side luggage segment And with this latitude which is based upon our technology, but which is designed by the Tumi team, this product is off to a very good start. So we are very hopeful that it should make a big difference. So this is how sometime when you acquire the brand, each brand can add value to the other business also. All key categories also contributed to net sales growth. If you look down there, excluding Tumi and including Tumi when you look at their travel grew by 15.8%, but let's keep Tumi out, grew by 8.4%, business by 7.8%, casual by 26.6%, assisted by 11.2%. It was a very, very holistic growth. It was not limited to one category. This is what is the strength of our business, which we have been talking since our IPO days. I remember when Tim first took over the company as a Chairman of the company, we were largely a luggage company selling in one price bracket under the brand Samsonite. Now non travel as which is listed now here, non travel almost ends up to around 40% of our revenue now. When Tim took over that number was in low single digit. So you can imagine in last 8, 9 years from being a low single digit that number has been grown to around 39.3% for 2017. So it's an incredible phenomenon. When you really look at the other thing we have been able to do it is also expand the brand portfolio. The brand through expanding the brand portfolio, also we occupy many more price points than we were ever doing it in the past. So that gives our business that fundamental resilience of navigating any kind of tough economic scenario. So when Russian ruble is going through the toss, so there is an issue in Middle East, so there is an issue here and there, we know that consumer tends to move up and down. They trade up and trade down in terms of the price points. Different operating larger price segment through multiple brand gives our business that much more resilience. Similarly, balancing our business between travel and non travel because the past our experience always tells us that the buying cycle of travel product is definitely longer. The consumer tends to change their luggage maybe once in 3, 5 years, whereas consumer tends to change and upgrade their close to body product like casual business bag and things like that. Our experience tells us almost once every year. So that also allows us to then operate retail stores more credibly. If we're operating retail or direct to consumer business only selling luggage, nobody gets excited to walk into the luggage store unless there is a reason for them to go in. So this is what gives our business that fundamental resilience, I would call it. Slide number 28 is more about talking about how we have dialed up our A and P spend. As we said in the beginning, we increased our advertising spend by around 43.3%. North America and A and P spend were dialed up from 5.4% to 6%, Asia from 5% to 5.9%, Europe from 5.1% to 5.6%, Latin America from 4.4% to 5.5%, overall from 5.1% to 5.9%. Going forward, we will stay in this zone. So if you look at in 2016, we dialed up from 4.5 to around 5, 5.1 and now from 5.1, we have dialed up to 5.9. We believe that we have arrived where we are comfortable and we feel that we want to stay there. Targeted brand advertising, these are some of the advertising that we do in different parts of the world. Slide number 30, we are increasingly spending an increasing proportion of our A and P spend online because the consumer is spending a disproportionate time online when is interacting with a brand or a product or is searching for a product, it's done more often online than offline. So we had also dialed up our digital spend to close to around 60% of our total A and P spend from little less than 50% last year. I have it, financial highlights. Okay. Good morning, everyone. Some of this is a recap just to make sure we point out some of the points that make us excited about the growth we're seeing. So our core or our overall business grew to close to $3,500,000,000 as Tim said close to a quarter growth 23.3%. Excluding Tumi 10% and if we further excluded eBags 6.3%. I think importantly for Tumi when we look at the comp period as Ramesh said earlier, Tumi is building momentum when we look at the growth profile. So the overall growth for the year 12% on a pro form a basis. But when we look at the periods that are comping August through December 2017 versus 2016 momentum is picking up. So we have 14.5% growth. Some of that is Asia and Europe now starting to get in stride and core North America business continuing to perform very well for the Tumi business. So adjusted net income, when we look at that, it's slightly up $2,700,000 increase, but that's adjusted net income is up. When we think it's not on the page here, but I have a slide later. When we think about profit to equity holders which is really the next chart. If we adjust for the one time tax effects our underlying business is actually up from a profit perspective 12% on a reported net income to shareholder base. Percent on a reported net income to shareholder base. We had very strong operating cash flow up $80,000,000 year over year, so we're $340,000,000 of operating cash flow. And that is despite $30,000,000 of extra interest as I said and also reflective of the significant increase in advertising spend as well. The company is in compliance with all of its debt covenants as you would expect us to be. We have delevered a bit. So we've gone from 2.84 last year to 2.74 this year. And I think it's important to point out that we were doing a lot of things in 2017 still. So we acquired eBags $105,000,000 We bought back the distributors the rest of the distributors that we wanted to buy back for Tumi in a faster way when we modeled that we thought it would be over 2017 and into 2018 and we very quickly did these in the first half of twenty seventeen. That was around $65,000,000 of cash spend as well. We bought back the JV partner for our Australia business. So we operate in a few markets with JVs and they have the ability to put back those things. We're quite happy when they show up. We can buy them at a reasonable price and bring that business fully in. That was around $32,000,000 And we also as everybody knows continue to have a dividend to shareholders $97,000,000 last year. So despite a lot of activity from a cash perspective, we continue to deleverage and continue to move the operating cash flow generation of business up. Net working capital continuing to run around this 12.5%, I think you're 12.4% for 2017, slightly better than our own targets. And importantly on working capital as we have Tumi now fully synced in with the rest of our business. So when we initially acquired Tumi, we needed to move things like payable days to be in line with how we're operating our capital and that's all been completed. We spent around $95,000,000 in CapEx up a little bit from last year largely due to the full year impact of Tumi in 2017 versus 2016. And we're really focused on continuing select retail expansion and retail enhancement along with continued focus on product R and D and product development. So some of our CapEx goes to that as well. We've got another noisy year for tax rate. So if you remember last year we ended up with a slightly positive tax rate because of pension benefit we received. This year with the enacted tax law that get signed in January, but it ended up in December. It triggered a very large one time tax benefit in the U. S. I would call it a non cash tax benefit. We're really just recalculating our deferred tax assets and liabilities at a new lower tax enacted corporate tax rate. So you end up with a big benefit. The next slide I'm going to show you kind of what that does and how you take that out when you look at our underlying business. And then just yesterday, we the Board approved a dividend payout for this year, a distribution to shareholders, I'm going to call it a dividend distribution to shareholders of $110,000,000 that's up around 13%, which actually lines up with how we view underlying growth and profit to shareholders, which was up around 12%. So as we've said, we would grow this in line with earnings growth and that's what we're reflecting for the distribution this year. So on Slide 32, this is my attempt to be overly transparent as we always are with presenting our numbers. I try to bridge for you what's going on with reported net income to shareholders. So on a reported basis, it's up 30%. A big piece of that is really this last column to the right, which or second last column to the right, which is the net impact of tax benefits that I would call are non cash and non recurring in many ways. If you adjust just for that, our operating income is up 12%. And in the middle of the page, you can see where it's coming from. So you can see our core business growing 31% and then us consciously deciding to spend more advertising again. So that's why our core business, the numbers look a bit flat, but that's decision we had made to bring advertising back up to the levels we wanted to be. And then you blend the next bunch of numbers together and this is really the Tumi benefits. You have in your comp growth, you have year over year growth offset by interest and this is where again I think a very important point the core business for Tumi in its 1st full year of operations is very accretive to our business now. So we've been able to absorb all of the extra interest costs with the growth in Tumi, some reductions we've received on the interest costs, this business is comfortably producing incremental profit for us in a very quick way. So we're very excited about that. On Slide 33, here's where I'm attempting to give you a sense for underlying tax rate versus reported tax rate. So our operating tax rate last year, if I adjusted for onetime items, was around 27.8%. This year, our underlying tax rate taking out the one time is around 26.3%. So it's a bit of profit mix shift in the business, which is causing the rate to be a little lower along with some kind of adjustments and things like stock comp. So as our share price has risen, it creates a larger tax deduction. So underlying rate for 20 17 as you're thinking about the business is around 26.3%. As you know, on a reported basis, or maybe you're just kind of digesting the numbers, we just put them out. But on a reported basis, we're showing a benefit of 7%. If you go to the bottom of the page, here's where I'll give you a sense for how does it compare for 2016, 2017 and what our outlooks are for 2018. So 2017, our underlying tax rate 27.8 percent I mean for 2016 2017, 26.3 percent, so a bit of improvement. And my outlook for 2017 is around 25% to 27%. And as I look at it now, it's probably on the lower end of that range. We do get a slight bit of tax benefit for the enacted tax change in the U. S. But as you know, we're a Luxembourg company. We have profits around the world. The portion that's subject to this lower corporate tax in the U. S. Is a smaller piece. But we on a blended basis, it's largely Tumi that's Tumi North America business that's sitting there. We'll end up with a lower effective tax rate with the enacted tax change. So, fairly stable and slightly steady decreasing tax rate. I would say as you're modeling your business, you should assume we're in this kind of 25% to 27% range in the next handful of years is a comfortable place to model. From a balance sheet perspective, we have a very strong balance sheet. I went through the cash flows of the business. So we generated $341,000,000 of operating cash. Our net debt is about the same. We're slightly up on a net debt basis, which is at the bottom of the page here, up around $30,000,000 Really a function of these kind of larger things we did in 2017, the eBags acquisition, the distributor buybacks. As we look to 2018, we don't have a lot of these things in the works. So this is where we will see probably a heavier deleverage in the debt numbers for 2018 versus 2017 because we don't see a lot of these things in our kind of vision at the moment for 2018. So and we and I'd expect our operating cash flow to continue to be very, very strong in 2018. Pro form a leverage as I said 2.74 versus 2.84. I think this will navigate. It will still be north of 2 times, but it will get closer to probably 2.25 times net leverage or leverage ratio by the end of 2018 in line with what we originally anticipated. We have a lot of liquidity. So we have not only cash on hand of around $350,000,000 but we have $430,000,000 available under our revolver. So the business has a lot of capacity within its balance sheet to continue to do what we're doing. And as I said earlier, the working capital is very strong. So we're quite happy with where we are on an overall basis with working capital, which is Page 35. So you'll see about the same number year over year. I think when we look at working capital, what you'll notice is that our inventory days are up, 2017 versus 2016. There's really a couple of reasons here. 1, we had this Ronaldo campaign and we had American Tourister starting to pick up some momentum. And we wanted to make sure we're in a strong inventory position as that take stride. But I would also say and I think we said this last year, we were probably a little lower than we wanted to be last year. So when we looked at our 2017 2016 numbers, we felt we were missing some opportunities. So we strategically increased our inventory days. I would say on a blended basis, we're going to run around 2 15 to 2 20 days depending on the time of the year. We're a little higher at the end of 20 17 largely because of the initiatives we have from an advertising perspective leading into this year. So all very good there. And then from a CapEx perspective, it's up. We spent around 70 last year, about 95 this year. A big piece of that is a full year of Tumi versus last year. So around $15,000,000 of that increase is really just the full year effect of Tumi. And where we're focusing, it's the same places we're focusing on targeted retail expansion, some retail store refreshes and fit out. So you can imagine we're refreshing Tumi stores. We're also Tumi stores. We're also been playing around with the Samsonite concepts and you'll see that and you saw that in some of the pictures Ramesh presented that we're kind of enhancing as we move to a more multi category kind of presentation in our retail stores and this women's first initiative that we're pushing, you'll see us refreshing stores to have the stores well positioned to do that and that will show up in some of our CapEx numbers as well. And with that, I'll turn it to Ramesh to conclude. Okay. The outlook going forward. So our outlook, we maintain a positive outlook to our business. As you all know that United Nations World Tourism Organization, which is kind of a barometer to the tourist arrival globally, estimated that the tourist arrival grew by 7% in 2017 and their outlook for 2018 is anything within 4% or 5%. So that's kind of an underlying growth to our business. So we do believe that our industry would continue to grow at around 4% to 5%. And we have enough and more tools within our means to grow a cliff faster than that. The company aims to grow shareholders' value through sustainable revenue and earning growth and free cash flow generation. In order to achieve this objective, we have following studies. Number 1, we'll continue to work on multi brand strategy to operate a wider price point, which I tried explaining before, both in travel and non travel category with bigger emphasis on the women category. As I said, we do feel that our overall revenue contribution from the women is only mid single digit, whereas Tumi gets a contribution of around 21% from the Women First. So there is an opportunity for us to grow that part of our business. I want to moderate your expectation that when you make such kind of strategic move, it is not a process that moves a little from today to tomorrow. It's like 5, 10 year kind of a thing where you gradually start to entice the woman with your product and your brand needs to be repositioned to be sexy enough for women to look at you as one of the choices. We also intend to continue to increase our direct to consumer channel business. As I said, 2017, that number was more like 9%. We would continue to grow that over a period of time. And we still hold the view that over the next handful of years, we should be to grow that to closer to around 50% with a bigger emphasis coming from direct to consumer e commerce part of business. But we will also open selectively open retail brick and mortar doors in markets and for brands, which we feel still offers us opportunity. We intend to continue to invest to support our brand A and P spend, But A and P spend going forward, you look at it will be in the similar zone as a percentage of sales going forward. So our A and P spend going forward will increase more in line with our sales increase and not at a clip faster than that as was the case in last couple of years. We also intend to continue to leverage our regional management structure, sourcing distribution expertise because that has been one of our core strength that we can even being now close to a $4,000,000,000 company, we can still respond to the market like a small entrepreneur company. That I believe is one of our biggest strength and we have we are very protective about it. We are very proud about it and that culture is what we will very jealously protect it even though we will continue to grow even further. As Kyle said, as a company, we also realize that Samsung and more particularly brand is known for innovation. Practically every single major innovation whether it's through the functionality or is a technology, the Samsungite can take the credit for practically each one of them. And it is very, very important for us to ensure our leadership in the future that we continue to invest substantially behind our own R and D. We have put up a new plant now in Hungary, which is going which has just gone on stream earlier this week. And I believe that very soon we should be able to introduce product based upon a technology which I'm personally very excited about. But as I said, technology is something very difficult to time. But we will continue to invest behind new products, new designs and innovative processes. As a result, we are not changing our core strategy. The core strategy which was enumerated by Tim during our IPO days and even before that was to develop Samsonite Group as a well 8, 9 years. And I feel that that is not the task which is like 8, 9 years. And I feel that that is not the task which is done as yet. We can continue on the same path for good next 8, 10 years more. Thank you. Great. Thank you very much Ramesh for the closing remarks. I'd like to now open the floor to question. Starting with Luo Chen from BAML in front. Thank you. Thank you, management. Congratulations on another set of strong results. I've got two questions. The first question is, we noticed that we have a very strong Q4 last year for Asia, North America and also the American Tourist brand. We understand that Asia might be due to the recovery of India and Hong Kong for region specific reasons. But can we give some additional color on the reasons that driving that drives the recovery or the stronger performance in North America and the American Tourist in Q4 last year? And the second question is on the trading update for our year to date performance in terms of organic sales growth as well as outlook for 2018. Just now, we mentioned that in the future, we are not going to segregate Tumi in terms of the organic sales growth. But for the sake of like comparison, is it possible for to give a breakdown between Tumi and other brands when we are giving the guidance on organic organic sales growth for 2018? Thank you. Okay. Let me take the easier one. What I meant was that going into the detail up to the P and L detail of to me is what we are still debating how practical is it up to you, up to us to give it to you because as the 2 brands and 2 companies come closer and closer, there are costs which are sitting on both sides. So allocation of this cost is not an easy job. We can always go wrong with our cost allocations. So but in terms of the sales contribution and by brand and by channel, all that visibility, you will have the full visibility. And the P and L also, it is still an internal debate between us that can we maintain, not maintain. So it's not a matter that we have something bad happening that we won't need to hide it. That's not a purpose. It's just the practicality of it because then our number needs to be audited. And when you do not have a good way of posturing the cost between 2 brands, then how do you do it? So it will get treated like that. Coming to some of the other question that you asked about North America. North America quarter 4 growth, which have been stronger growth, you can largely attribute to 2 things. Number 1, definitely the comp sales have been stronger. The holiday sales have been much stronger. The whole macro environment in North America has been positive in Q4, and we have also been benefited by that. Together with that, we have also started to roll out what we call internally as American Tourister Reset strategy, which we started from the beginning of 20 17. American Tourister was originally an American brand, but for some reason, it got rejuvenated in Asia. And from Asia, it moved to Europe. And now it's getting relaunched and not just as a cheap luggage brand, but as a brand which stand on its own. So today, American Twist are positioning worldwide. It's a very young, colorful, youthful brand. Of course, the price is important, but we don't want consumer to buy American Tourister only just because it's the cheapest brand which is available on the shop floor. Now that reset strategy is getting implemented now also in U. S, which is partially benefiting the U. S. Numbers to come stronger in Q4. And I do believe the similar trend should continue in 2018. Looking back at our organic growth of our business, look at our base is also every year increasing. So we should not deny that when you are a $500,000,000 company, you're talking about organic growth is based on that. And now we're close to $4,000,000,000 And so the percentage growth when we look at it, all our businesses, all our business units, and outlook for 2018 is very positive. It is almost as positive as when we really came back during the IPO days. I don't see the macro environment or the consumer sentiments in the world in 2018 has been as good as it is now because it is across all geographies. In the past, there was always some geographies which were laggards and things like that. So it's a very positive consumer environment that I see, which should help our business. But nonetheless, the industry is expected to grow around 4% and our outlook is there that our own core business, we should be able to grow at mid to high single digit. Definitely in 2018, you may find that there are still some of the markets like Tumi more particularly, the distribution have just started in distribution expansion have started in Europe and Asia. So the 1st year that is 2018, you may find that the core brands other than Tumi may be growing at about mid to high single digit and Tumi behaves like a core brand in North America because there's no obvious distribution gap. So Tumi in North America will be also more like mid to high single digit kind of a number. But when we look at Europe and Asia, there are enough opportunities for distribution expenses that Tumi in Europe and Asia could be growing at low teens kind of a number. So when you blend everything together, it could be more like 9%, 10%, 10% 8% to 10% kind of a revenue growth. Good momentum going out of Q4s. Yes. We're feeling that. We feel nice and confident about saying that because the momentum is carrying right into 2018. Okay. And Spencer from UBS in front. Congratulations on good results. I have some questions around Ebay. I saw your numbers, 10% of revenue from your own brand and then 25% from private labels. If we is it fair to compare Ebay's to rolling luggage? And what's your aim in the long run? How much can you contribute to your internal sales? And I'm also interested in what are the conversations that you might have with other brands? Are they pissed off now that you have eBags and rolling luggage? How do they look at this? It's not everything constructive, I suppose. Yes, so that's my question. Thank you. Yes. So let's look at the E Bags. Today, the constitution of E Bags is such, as rightly said, when we acquired the business, around 20%, 25% of the sales come from the brand eBags itself. That means they have their own home brand. And about 8% to 10% was coming from other Samsung family brands, we can say the group brands. So when you put both of them together, it's more like 30%, 35% kind of number. It is definitely our desire that we will move that number up to closer to around 50%, 60%. But again, it's not happen overnight because it's a process which goes through it. We develop the product. We get the consumer feedback and we'll slowly, slowly do that. The reason we want to do that and we'll give a good example of rolling luggage, it's very similar to rolling luggage strategy. By doing that, you have double margins, you can control the pricing, you can control the experience better. And as a result, you can more quickly nourish eBag back to deliver some amount of decent profitability. But at the same time, like we were conscious of rolling luggage, we do not want to change the character of the site. The site is a multi brand site. So it is selling not only our own brands, but is also selling 3rd party brands. Quite honestly, in eyes of the consumer, even our own brands are our own probably to us and some of our shareholders. For the consumer, we do not sell our brands as if they are all part of the same family. You can very well find people who are telling you that, oh, American Tourister is competing with Samsonite. Rather met recently a very senior Indian banker. She is Chairman, CEO of one of the largest bank in India. I've worked with her in the past. She was telling me, oh, how Samsung are doing this, we are the same flight. And this is, now your life must be very difficult. I understand that American Russo is doing very well in India. I said, yes, but I don't mind, it's fine. She didn't get me. I didn't want to declare a fight with her because she was carrying American tourism. So the consumer doesn't see our own brand as all our own innocence that belong to the same company. So Ebag still will always remain a multi brand platform. Definitely, we have cleaned some of the shit. So you don't want to have brands which are doing nothing and they're not even making money. So if you look at when we acquire Ebags, they probably have something like 600 brands. Now when you go to Ebags side, you will find that 2 84 brands. So good 300 brands have been clean because the 300 brands are not even contributing 2.1% of the sales and making no money. So why do you want to do that? If you want to give consumer enough choice, but you don't have to drown the consumer with choices because we are not like Amazon. We are like the curator of the category. We want to present ourselves to the consumer that when you want to buy a luggage or a bag, we will help you to make the right choice. And the right choice probably can be made in one category by maybe 10, 12, 15 brands. Okay. A follow-up question from Spencer again. I was trying to get myself a luggage when I was in the U. S, and I realized eBags do not does not ship to Hong Kong. So I had to have it shipped to the U. S. In my hotel. And then I've done some searches and I realized practically the prices of Tumi are exactly the same, whether you buy from Nordstrom, Macy's or Ebay, whatnot. So how do you see this playing out going forward? It's not going to be, I presume, as easy as a rolling luggage expansion because now prices are very transparent. What's your expectation on the organic growth of Ebanks? No, I'm very happy that you saw that because in the past that was not happening and that was for me a minimum beginning point. You cannot create price arbitrage. You know, it's a convenience of shopping online. What I don't want consumer to think that when I go online, I'll get 20% That's not the purpose. That's Amazon's services model. That's not our business model. Even with Amazon, that's a minimum, let's say, minimum place for us to have a dialogue. As I speak to you now for last 3 months, Amazon has been blacklisted by us to deal in India because we will not let a portal or a channel create price arbitrage. Then you're being you're trying to create an unfair advantage at the cost of diluting the brand equity. So I'm very glad that our E batch friends have done that. If you told me that way around when you were dwelling your question, I was saying, fuck, have they done or not done. So I'm happy that they've done that. And the sales will grow because people will shop on them for online because of convenience. You can also create more demand for online by creating exclusive products. Because online has the biggest advantage that doesn't have the limitation of space. Like Neiman Marcus, you can give him the entire assortment, but he can pick up you know, he can cherry pick the collections because there's a physical limitation of the space. Now the same collection when we offer to, let's say, eBags, eBags can have as wide as possible. Maybe sometime in, we will have if I look at any of the traditional brick and mortar guy can never afford to have more than 2 colors. But online can offer you 10 colors. Online can do personalization more easily. In store personalization is a very theoretical thing to be done whereas online personalization and monogramming and so many other things is much more easy to execute it. So there are benefits with the online channels can create or offline channel. And personally, honestly speaking, I don't care a shit where the consumer buys it, whether it buys online or offline. I'm quite okay that you search online any bags, you were looking for Abboud Sahaj, you didn't get it, then you will think, why do I need to buy in the U. S, might as well I go to Hong Kong and I'll buy in IFC. That's the ultimate goal that we have. People should buy not hunting for the bargain. They should buy for the intrinsic value of the product, similar value across the world, across all channels. But you can always do channel product segmentation. So that will sometimes feel that if I missed the opportunity of not buying any bag that particular color, that particular style, I come to IFC in Hong Kong, maybe I will not get because not all products will be delivered at all places. This is where you give a support to one particular channel. The same way when you are in IFC, probably you'll find here some specific product which are available here would not be available on Ebanks. Okay. Before we take more questions from the floor, I'd like to see if there are any questions out from online. We have one question from Gary Pinch of Comgest. He says a while ago, you spoke about a strategic review of spec. How is that progressing? Can you repeat the question, please? A while ago, you spoke about a strategic review of spec. How is that progressing? Yes. Yes. We did completed the review of spec and at this moment we feel that it is a business which is little different to our core business, but nonetheless, it can very well exist within our portfolio of the business. Given its autonomous nature of the business, we are quite happy to keep spec within our family because it's a business which is profitable. It's a business which has, let's say, something in common with us. It's also a business which we know we can do very well on online business, especially post acquisition of Ebags and the knowledge base that we have, the database that we have, all of that could be put to good use for spec. So spec would very well stay within our portfolio of brands. Great. Then moving on, Anne Ling in front, please, from Deutsche Bank. Hi. I have a question on margin regarding Tumi. I think last time when we met, we you talked about margin for Tumi. GP margin for Tumi can be as high as 60% as a target. So where is it are we still keeping this target? Where is it from? Is it from the new product offering? And also, like you know, for Tumi, new product offering, how do you position in terms of your price point? And the GP margin improvement, also from like the efficiency improvement that we talked about. Is all these integration already done? What are still outstanding? And the second question is for the overall EBITDA margin for the group. I think last time we mentioned about like achieving something like 20%. I think we are getting there already. And is there a new target for that? And yes, where is the efficiency coming out from? Thanks. Let's talk about Tumi. Tumi, when we acquired, the gross margin was more like high 50s, 58%, 59% kind of number. And we had indicated that we had a view that probably over the next handful of years, we should be able to get it closer to around 60%. When you look at our numbers in 2017, it was already up to 66.5%, which is almost 400 basis point improvement as compared to 2016. And already 2016 second half was somewhat higher than when we acquired the business. We still hold to our view that by the time we get into quarter 4 of this year, the margin will navigate automatically to get more closer to 70%. It is happening because of a variety of reasons. Number 1, it is happening because we have made the brand less promotional than the brand was. So the promotional cadence of the brand have been marginally reduced. We are less desperate to just buy in sales. 2nd is also we have converted some of the business which were distributor led business to direct business. Also has helped we are booking the sales at the retail value, so your gross margin is also seeing a little bit of an uptick on that. And the third is as we have spoken last time that to Tumi definitely can get benefited by the freight contracts of Samsung, right, because Samsung moves many more containers than Tumi moves. All that put together, I think it will get closer to 70% by the time we come to end of 2018, that's a quarter four exit run rate, should be around 70%. So for the full year, it could be maybe 100, 150 basis point improvement than what you see there. Coming to the operating margin or EBITDA when you look at it, our outlook now is there that when you really look at our business, we believe that our business now has enough legs, I'm talking about over let's say next 5 years' time. 2018 could be slightly different year, but over 5 years' time, we look at it, our business to grow at high single digit is because the business, the industry will grow by 4%, 5%. Definitely, we can continue to grow this business about high single digit. 2018 could be that it will be more like 10% number because we have still some white space around Tumi to grow Tumi in double digit. Our gross margin would see some improvement, which is more on account of also different brands are moving at different pace. But we are definitely an A and P will become range bound. So today we are at about 5.9%. So you have to think about A and P remaining the same level. So you will start to see that our EBITDA which we have been reporting. So from 15.6% which was in 2017 start to creep up every year by anything between 30, 40, 50 bps year on year. And ultimately, one day, we still hold that dream that we should get closer to 20%. Okay. Next question, okay. Mariana from CNSA. Thank you, management, and congratulations on a strong set of results. My question is mostly around the retail strategy. If we could get a bit more color on what you're thinking in terms of, well, I guess, by region, in terms of retail strategy, what is more single brand, multi brand and how that could impact the CapEx. If we were starting doing more multi brand stores, would that imply that the CapEx per store would creep up quite significantly and impacting the cash flow going forward? Thank you. Okay. Our retail strategy is more opportunistic, I guess, opportunity based. We believe that for brand Tumi, for example, there is white space in terms of our retail expansion in a few geographies, more particularly China, where we feel that we can easily identify places where we should run retail brick and mortar retail and we're not there. So you'll find that there would be we're aiming to add close to around 20 retail doors in China in 2018 because there's a lot of white space around that. Similarly, we will you find that the retail expansion in Europe for brand to me will be a little bit faster. Maybe we'll end up adding another 15, 16 doors in 2018 in Europe. Latin America is another place where still we see that we have opportunities to expand our brand store both for Tumi as well as for brand Samsonite. So all in all, when I put everything together, I would say that we have been adding about 100 odd new dose. Numbers will remain more or less the same. It's just the geographies will change. But when you look at more matured markets like North American market for brand Tumi as well as Samsonite, we may add 3, 4 doors, we may close 3, 4 doors. So it's not going to materially alter the number of doors that we will have in North America. We open new doors because there are new malls coming up and there are more opportunities available. Where there are some malls which are losing traffic, we may decide to close them. So the base remains more or less there the same. Same is true now for brand Samsonite in many of the geographies like Asia and Europe. They're not real very big obvious opportunities for us to grow rapidly. Our key focus now is to spend more resource and in trying to grow online presence Because if you look at it, we are doing very well with online in North America with brand Tumi. We are doing okay with our other businesses, other brands in North America and Europe. Asia, we're just getting started. So Asia, the whole online piece is still a white space. I must admit it that it turned out to be more challenging than we anticipated when I met all of you in 2016. I thought that we will be there in 2017. I'm still saying that I hope to be there in 2018 because the process of implementing a credible online strategy, your own D2C online strategy is far more challenging because Asia is not a monolithic market. Unlike Europe, when we use the word Europe, you can have one software, you can ship out anywhere, it can work. So you have one platform, you just change the languages, it works. In Europe, in Asia, it doesn't work. In the Myanmar have their own regulations. I mean, I'm not saying that we are going out from Myanmar to open a platform there. But if I want to do that, I'm born in Myanmar, that's like an example of Myanmar. You're amazed that how many regulations are trying to control that. So it has been a little bit of a frustrating exercise, but we're very hopeful that 2018 we will get there. So this is how we look at it. It's not that materially our CapEx, if that's what you're coming to is that our CapEx for 2018 will any materially change as compared to 2017. We spent close to around $30,000,000 $35,000,000 on CapEx in 2017 is a similar run rate will be maintained in 2018. More questions from the floor. Dustin, Morgan Stanley. Thanks, Benjamin. My first question is regarding your wholesale business. So during the reporting of the East region, you mentioned that the wholesaler actually sell more products to the e tailers, and that seems the trend, especially in the North America and the Europe. Do you see that dynamic is a risk to your harmonized pricing strategy or your channel management? And you have mentioned that like across the region, especially for North America, the retail sales being very strong in the Q4, maybe going to the Q1. But how do you see the wholesalers? Are they disappointed in terms of managing their own inventory? And the second set of question is regarding the new products. I think the new products kind of form a play a major role in your sales target for 2018. So could you provide some of the recent KPI for your newly launched American Tourister's luggage or your new Tumi series? Is that really positive that support your guidance? And just for the sake of being conservative, if some of the new product doesn't really work out to your expectation, what kind of the sales guidance that you will provide? Thank you. Okay. Now the wholesalers, we do not encourage wholesalers to sell to e retailers. We do enter into what we call as a selective distribution agreements and that we're enforcing worldwide. Wholesalers creating their own web pages and own websites like Lotte today or macy.comorlotte.com, we have some view of their business today. If we look at it, our sale to Macy's almost a quarter to a third of their sales are actually passing through macy.coms andlotte.coms. And that's fine for us because we treat that sale as a wholesale sale. And as long as they are selling those products to the end consumer, it's perfectly fine. What we are not fine with when a luggage specialist buy for us, buy from us to sell it in their store and we find that they end up selling it to our e retailer whose only purpose is to do parallel export into Korea or into Japan trying to take advantage of the price arbitrage. That is something which we do not encourage. We'd rather go rather heavily on that because our wholesale agreement with our wholesaler is very precise and specific it is to the end consumer. They are not allowed to re trade with another wholesalers. So I don't feel worried about it. We actually work very closely with their portals also because in many department stores more particularly, they start to treat their portal as an independent buyer working there instead of the same buyer who's doing the brick and mortar, where there are some companies are working with the same buyer. So buyer of a category is buying for the floor and buyer of the category is also buying for their portal. But definitely, you're right. The portal business for every single department store in hypermarkets, they're all growing and we're very actively engaged with them. And we're very happy doing that. And that's the only way when some of these traditional doors will survive because if they do not grow and some of them who are little bit lagging behind are the guys who are feeling the pinch and the guys who are way ahead on the curve in getting their own online strategy in place, they're feeling less pinch. Coming to the new product and newness, you rightly said newness is the next buzzword for the consumer. It's not for this year, but for last couple of years. The consumer is almost getting obsessed by newness. I remember when I first joined the company, we could have one successful collection, which could sell for next 20 years. There was a collection called Oyster, which sold for good 25 years in this company. It was number 1, 25 years back and it was still number 1 until 23 years back, I'm 20 days later. Now you just cannot imagine that will happen. So today when we look at it, one of the benchmark that we start to work in 2018 is that all our brands, all our doors, all our channel, the objective is to see 50% newness at every point of time. Newness for us has defined that our point of sale should carry the product which have been introduced during the same year, less than 12 months. Product introduction should be 50% of the merchandise of the brand and of the point of sale. Right now, I speak to you until last year, the number in our head was 33%. We said we want to achieve 33% newness and now we have moved that expectation from our brand teams and product team to aim to move that newness to up to 50%. Another thing which is also happening at the consumer level is the definition of newness has changed. In the past, when you bring a new color, it was considered new. Now the consumer doesn't care a shit about that. For him, it's not new. Unless in the form, the fabric, the feature, the functionality, the obvious look is different, it's not new. So the easy opportunity of bringing newness by changing the color, the fall winter color, you know, that consumer now takes it as bullshit. So when you want to have you want to have a fall winter collection, not just the spring summer product being put into new color and will be considered as a new collection. So you know and we are very well geared up for that. Now the last thing which you asked to me is that what happened when the collection does not do well. Yesterday we were discussing and I was briefing Tim about that you know. I'm going the other way around. I'm telling our people that I want our teams to design product where minimum 1 out of 4 collection must fail. So if you start designing product where your objective is that 4 out of 4 should work, that means you are not bold enough and you are not pushing the boundaries because we are better off to push the designers to work and not try otherwise what happens you know the larger you are when you become risk averse, the product will become that much more you know, you may feel it's new, but the consumer will not find any newness in that. So we are looking at other way around to say, you know, I'm actually starting to challenge, tell me which of the collection did not do well. And what's our learning? Because we are such a big ship and we run a very good, thankfully to my friend, Kyle, we run a very good technology platform where we can control. So once the line does not do well, it takes us around 6 weeks to close the tap. Of course, in the 6 week, you have some shit. But then you burn the shit, you know, you burn the shit as quickly as you can because the shit if it stays in the shop probably it'll stink more. But thinking that I will not create a shit, your product itself will become boring. So that's a new way as we are trying to guide our design team, you know, that they need to be bolder. They should not be a risk averse. Then only we will have products which will be outstanding in the eyes of the consumer. And if you have to win tomorrow's consumer who's becoming more demanding, he's able to see everything which is happening across the world, not only when he goes and shop in the store that he knows what is offered there, he already knows what's offered in any part of the world because how much people are doing search. Our statistics tells us that even people who are visiting our brick and mortar doors, more than 75% of those consumers actually have spent enough and more time searching about our product or our category before they landed up the store. So the sales training also needs to change because you need to first ask him that what all he has already seen. In the past he comes and then you start to talk to him that I have this new, this new, but now you have to check with him because most of our consumer already has spent good enough time on online before they've landed up at the store. So things are changing. But I think we have a very good team who are keeping their ears close to the ground. As you know that end of last year, we also introduced Charlie Cole as a Global E Commerce Officer because we start to see e commerce as a is almost like another region by itself, where people are shopping online, they're not necessarily recognizing the traditional boundaries. Like he wanted to shop on eBag and wanted to ship to Hong Kong. And more and more people expect that service to be there. There was some reason why we didn't want to ship it to Hong Kong because many of the product which are sold by eBags, we do not provide service in Hong Kong as that. So it takes us time to get that ready because we would not like people to buy the product there, ship it to Hong Kong and suddenly you have some quality issue, then you are asked to send it back to U. S. So we like to first put in place a robust service after sales for all our product in other geographies before the cross geography shipments are permitted and encouraged. And then you had asked about the wholesale trend that's very similar to retail trend. I might even argue when you throw in e retailers, that's growing at a faster clip in a more meaningful way. So similar trends that we're seeing in retail are carrying in the wholesale business Q4 into 2018 as well. And American Tourister typically goes through a bit more of a wholesale channel. And as we said, that's building momentum as well. So that will weight that wholesale growth up as well. Great. And sorry, I think we are running out of time. So thank you very much, everyone, for attending the presentation. And as always, any questions, feel free to let me know. Thank you. Thank you. Thank you.

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