By Cheryl Lu-Lien Tan
17 August 2007
Earlier this year, Alexander McQueen, the British designer known for outlandish fashions, introduced a new collection in the U.S. But rather than showing a dress stained with baked clay, as he has done in the past, Mr. McQueen presented something even more unexpected: a line of luggage for Samsonite Corp.
Yes, Samsonite. The $1.1 billion luggage and travel-accessories company best known for sturdy and functional suitcases, is trying to reinvent itself as a sexy, high-end label.
In a bid to become a player in the booming luxury-goods market, the 97-year-old luggage maker, based in Mansfield, Mass., is diversifying its products, changing its advertising and making acquisitions. It hopes the overhaul will help shoppers forget its muscular image: hard-shelled bags so tough that ads bragged they were "Strong enough to stand on."
In addition to Mr. McQueen's edgy designs, such as a $750 suitcase on wheels designed to look like a human rib cage, Samsonite has also signed on actress Christina Ricci to be its first Hollywood spokeswoman. The company also recently launched a line of high-end men's shoes. Sunglasses and stationery are in the works.
Samsonite is taking its brand upmarket in hopes of emulating the success of other well-established brands that were able to modernize their images and appeal to a fashionable customer. "The companies I admire are Burberry, Coach," says Chief Executive Marcello Bottoli, who joined Samsonite in 2004 from Louis Vuitton and is the mastermind behind the brand overhaul. "Both were companies that had a long history and managed to make it in the fashion industry."
Samsonite's potential as a global luxury brand is what led private-equity firm CVC Capital Partners, to agree to buy the money-losing company last month for $1.7 billion from private-equity investors Ares Management LLC, Bain Capital Partners LLC and the Ontario Teachers' Pension Plan; the three sellers together own about 85% of Samsonite's common stock. The deal is expected to be finalized in October.
CVC plans to expand Samsonite's retail presence in emerging markets such as Russia, India and China. It plans to leave current management in place and continue pursuing the move upmarket that Mr. Bottoli began in 2004. "Moving the business upscale raises awareness of the brand," says Nick Clarry, managing director of CVC's United Kingdom team. "If consumers see an amazing [luxury] bag by Samsonite, it gives them confidence that Samsonite can deliver on customers' aspirations."
But Samsonite faces daunting challenges before it can transform its image into a luxury brand. Branding experts say its biggest obstacle is its name. "It's not a very alluring name at all," says Alan Siegel, chief executive of Manhattan-based strategic-branding company Siegel + Gale. "Samsonite shoes' makes you think of Florsheim, a durable, sturdy midpriced shoe that's not particularly stylish -- certainly not Prada."
Even company executives acknowledge the uphill battle they face. "We have quite a hard image to break away from," says Quentin Mackay, the company's global creative director. "People still think of that hard, plastic suitcase when they think of Samsonite."
To rebrand itself, Samsonite has started adding star power to its advertising. While its ads used to emphasize the functional aspects of its luggage, the company has been featuring celebrities such as British tycoon Richard Branson, race-car driver Danica Patrick and actress Isabella Rossellini in ads in fashion magazines like Vogue.
It has also begun sending actresses such as Sarah Jessica Parker and Cameron Diaz luggage, hoping they will carry it and be photographed, influencing hip, young customers. Indeed, Star magazine recently ran a paparazzi shot of Ms. Ricci traveling with a Samsonite suitcase.
The company also plans to expand its stores with a new upscale-retail concept called "Samsonite Black Label." Since last fall, Samsonite has opened 30 of the new stores world-wide, including London, Hong Kong and Dubai -- to date, it has 45 such stores. The stores sell Samsonite's $225-to-$395 men's and women's shoes and Black Label products, pieces from the new McQueen collection and custom-made bags, ranging in price from $450 to $7,000. That's a big increase from Samsonite's price range of $100 to $500 for luggage.
Last year, Samsonite acquired a majority interest in Lambertson Truex, a high-end leather-goods maker co-designed by former Gucci design director Richard Lambertson. This spring, in New York City, Samsonite opened Lambertson's first retail store and next month will be opening a second New York store, with plans for two or three more stores next year.
Founded in Denver in 1910 by trunk salesman Jesse Shwayder, the company initially was called the Shwayder Trunk Manufacturing Co. and one of its first suitcases was named "Samson."The company was renamed Samsonite in 1966 and now manufactures and sells products in department stores and in almost 600 of its own stores and franchised retail stores globally.
Its brands include Samsonite, American Tourister and Lambertson Truex. It also manufactures luggage under license for Lacoste and Timberland.
Mr. Bottoli was brought in by the previous investor group to overhaul the company's image in 2004. At the time, Samsonite was struggling after various ownership changes and four years of net losses totaling $285.3 million in the late 1990s and early 2000s. It also took a hit in 2001 after lenders pulled out of a refinancing pact following the travel slump after the Sept. 11 terrorist attacks. The company's stock in 2001 plummeted to under $1 after the attacks, down from a high of $50 a share in the late 1990s.
U.S. sales of luggage still haven't fully recovered since the attacks. Industry sales dropped nearly 8% to $2.03 billion in 2001 from 2000, according to the Travel Goods Association, an industry group. Last year, U.S. luggage sales were slightly more than $1.9 billion. Mr. Bottoli notes that since the U.S. accounted for only about 40% of Samsonite's sales in 2001, the company wasn't hurt as much as it could have been.
As part of his overhaul, Mr. Bottoli hired Mr. Mackay, former creative director of London-based leather-goods maker Tanner Krolle, in 2005 as the company"s first creative director. Mr. Bottoli also formed a new design team in London to focus on designing luggage from a fashion standpoint rather than purely a technical one. In 2006, Samsonite signed on trendy British designer Matthew Williamson to design a limited edition line of luggage.
Mr. Bottoli says the brand's efforts are beginning to pay off. Sales for the fiscal year ended Jan. 31, 2007, were $1.1 billion, a 10.7% increase from the $966.9 million in sales the year before.
Last year, the company had a net loss of $6.8 million compared with net income of $13.3 million in fiscal 2006. Mr. Bottoli blames the losses on payment of a $175 million dividend last year and higher costs associated with refinancing the company's debt.
Before Samsonite becomes a luxury brand, it will have to win over customers like Heather Lapham. The 30-year-old Manhattan-based financial controller travels for work two to four times a month and says she was surprised to hear that Samsonite has started to make shoes and is branching out into sunglasses.
"If I was spending a few hundred dollars on sunglasses, I'd go buy Tom Ford. I think that's a luxury brand," she says. "When I think Samsonite, I think 'sturdy.'"