Samsonite Corporation Business Information, Profile, and History

Company Perspectives:

Alongside lengthy experience, the quality and strength that characterize every aspect of the Samsonite business have created a heritage of success. Remembering past triumphs but always looking ahead, Samsonite maintains a global vision—a vision that will propel the company into the new millennium. The future is a world of travel, of abundant mobility, and Samsonite is ready for this world-on-the-move.

History of Samsonite Corporation

Samsonite Corporation is the leading manufacturer of luggage in the world and the top seller of luggage in the United States, Europe, and Japan. In addition to its world-renowned Samsonite label, the company also markets the popular American Tourister and Lark brands. Under those names, Samsonite offers a full line of luggage, including softside and hardside suitcases, garment bags, casual bags, business cases, and other travel bags and accessories. Samsonite changed ownership several times during the 1980s and early 1990s before regaining its independence in 1995.

Colorado Origins

Samsonite owes its start to Colorado native Jesse Shwayder. After growing up in the American West during the late 1800s, Shwayder was working in New York as a salesman for the Seward Trunk and Bag Company by his mid-20s. He was making a lot of money, but he missed Colorado and longed to pursue his dream of starting his own business. Thus, Shwayder quit his job when he was 28 and moved back to Denver. Shortly thereafter, on March 10, 1910, he founded the Shwayder Trunk Manufacturing Company with his life's savings of $3,500. With a work force of 10 men, Shwayder began manufacturing what were known as suitcases in a 50-by-125-foot room that he had rented in downtown Denver. The management philosophy he adopted to guide the firm from day one, according to company annals, was the Golden Rule ("Do unto others ..."), to which Shwayder adhered tenaciously.

Shwayder burned through most of his $3,500 in savings during his first year of business. He was able to borrow money to stay afloat, however, and had soon turned the corner toward profitability. His brother, Maurice, joined him in 1912, and together they traveled throughout the region in an effort to drum up sales and keep the business going. A few years later, Sol Shwayder, a third brother, joined the sales team. Shwayder brothers Ben and Mark also jumped on board in 1923; eventually, Mark worked on sales, Maurice and Ben focused on manufacturing, and Sol became the company's attorney. The brothers incorporated in 1912 and, having outgrown their downtown room, moved to larger offices. By 1917 they were selling $76,000 worth of luggage annually throughout the western United States. To keep up with spiraling demand they built a new three-story manufacturing facility. That new plant would also prove inadequate soon, as mail-order advertising expanded the Shwayder's reach eastward across the United States.

The Shwayders' success was no accident. Indeed, Jesse drew from his work experience in New York to develop a strategy that he would pursue from the start. He realized that he was facing stiff competition from deep-pocketed luggage manufacturers. So, rather than trying to compete with other luggage companies on price, he would differentiate his products by quality and charge as high a price as the market would bear. To reflect the quality and durability of their luggage, the Shwayders named their first products "Samson," after the powerful Biblical character. Indeed, the chief advantage of the cases was that they could take a lot of punishment and were extremely durable. In 1916, in fact, the Shwayders took a picture that would become an advertising coup. The four brothers and their father, Isaac, stood on a plank positioned atop one of their suitcases above the caption, "Strong enough to stand on." Because the five portly Shwayder men weighed more than 1,000 pounds together, the picture was striking and became an excellent promotional and direct-mail advertising gimmick for several years.

Domestic and International Expansion

The Shwayders rolled out their first nationally advertised suitcase in 1918. The premium quality case retailed for $4.95 and was advertised in a window at the famous Macy's department store; the suitcase was displayed with a half-ton of sugar resting on top. Boosted by the success of that and other products, Shwayder Trunk revenues rocketed to $300,000 by 1924. In that year, the brothers moved their operation into a gleaming new 80,000-square-foot factory in south Denver; that plant was gradually expanded to include a total of 500,000 square feet. The plant was organized to operate on an assembly-line basis, and even incorporated a state-of-the art conveyor system to transport products and materials in the plant. The company boasted in its literature that it built suitcases the same way that Ford built automobiles.

Shwayder Trunk's revenues bolted to more than $1 million during the late 1920s and sales, particularly to the eastern United States, exploded. To keep pace with demand, the Shwayders leased an 85,000 square foot factory near Detroit. With that plant up and running, the company seemed almost unstoppable. Unfortunately, the 1929 stock market crash and succeeding Great Depression quashed that perception. Indeed, Shwayder Trunk's shipments plummeted by 50 percent within a few years. The brothers, scrambling to meet payroll and pay their bills, began trying to supplant lost luggage sales by manufacturing products ranging from license plates and card tables to stilts, doggie dinettes, and sandboxes. To reflect the diversification, the brothers changed the name of their company in 1931 to Shwayder Brothers, Inc. Interestingly, the Shwayder's card table sales briefly surpassed luggage shipments during the 1930s.

Despite their setbacks in the luggage industry, the Shwayders continued to improve their luggage and invent new travel products. By the 1930s, in fact, the Denver luggage plant was the most modern of its type in the world. From that plant came innovative Samson luggage with exclusive features such as wood-frame construction, super-strong handles, rayon linings, fiber finishes, and secure locks. Specialty fibre finishes were developed by Shwayder Trunk specifically as a covering for Samson suitcases. In 1939 the company introduced a unique suitcase that Jesse dubbed "Samsonite." The suitcase, which was the predecessor to the popular Samsonite Streamlite line, was covered with sturdy vulcanized fiber that was used with a leather binding. The case's tapered shape was destined to become a classic within the industry.

During the early 1940s Shwayder Trunk's factories were converted to produce war materials. Immediately after the war, however, the Shwayders resumed their luggage and folding furniture business and even managed to sell $7 million worth of goods during their first year of postwar production in 1946. During that and the succeeding few years, the brothers integrated into the facilities all of the manufacturing knowledge that they gleaned during war-time production. That allowed them to introduce precision manufacturing methods and to incorporate advanced new synthetic materials into their products. By 1948, sales had shot up to $13 million. The Shwayders then split the company into two divisions: luggage and steel/folding furniture, with the latter division being headquartered at the Detroit factory. The company even opened a second furniture plant in Pennsylvania in 1949.

Shwayder Trunk again converted its manufacturing facilities for war-time production during the Korean War of the 1950s. Although part of that decade was spent building things like bombs and rocket carriers, the brothers managed to increase their luggage and furniture businesses. For example, they began building specialized carrying cases for everything from musical instruments to advanced electronic equipment. And they started producing vinyl clad material for use in automobile interiors. Importantly, the company introduced the Ultralite luggage line in 1956. That luggage was the first to abandon wood-frame construction in favor of magnesium and injection-molded plastics. Also in 1956, Shwayder Brothers expanded out of the United States with a separate Canadian subsidiary and an export sales department focused on Europe. Meanwhile, the flourishing furniture division was consolidated and relocated to a giant production facility in Tennessee.

During the 1960s, the company introduced a number of new products under the increasingly popular Samsonite brand name. They brought out several new travel and attaché cases, for example, as well as a line of upscale folding furniture and a successful line of metal patio furniture. The brothers changed the name of the company in 1965 to Samsonite Corporation to capitalize on the now renowned Samsonite label. Interestingly, the company introduced LEGO by Samsonite in 1960. The snap-together plastic building blocks for children enjoyed immediate acceptance in the North American marketplace and eventually became one of the most popular toys of all time. The stellar success of LEGO prompted Shwayder Brothers to launch more than 50 new toy items before the early 1970s. Lagging performance of the toy division, however, caused the company to jettison the operation in 1972 and focus on furniture and luggage.

Samsonite's gains during the 1960s were achieved under the guiding hand of founder Jesse Shwayder's son, King. Under King's leadership, Samsonite managed to firmly establish itself as the world's leading manufacturer of molded luggage and attaché cases by the early 1970s. Indeed, the company added manufacturing operations and sales offices throughout Europe and even Japan during the 1960s and enjoyed hefty sales increases in those regions. Having grown to dominate the business luggage markets, Samsonite set its sites on the mushrooming consumer luggage market. To that end, Samsonite introduced a highly successful line of soft-sided luggage during the late 1960s and early 1970s and even built new factories in Arizona and New Mexico dedicated to manufacturing soft-sided luggage. Samsonite simultaneously acquired companies that gave it leading positions in the markets for personal travel luggage-related products (such as leather toiletries kits), as well as redwood patio and casual furniture.

During the 1970s, Samsonite intensified its global expansion efforts related to luggage. By the early 1970s, the company was already operating facilities in Osaka and Tokyo, Japan, as well as in Holland, Spain, Britain, Belgium, Germany, and other countries. During the mid-1970s, though, the company acquired competitors or initiated operations in new manufacturing facilities in France, Germany, the Netherlands, Belgium, Mexico, and other places. By the mid-1970s, then, the company had achieved a truly global presence and was the leading manufacturer of luggage in the world. The enterprise, which was still headquartered in Denver, was employing a work force of 5,000 and boasted the largest and most advanced production facilities in the luggage and casual furniture industries.

Corporate Carousel

After operating as an independent under the direction of the Shwayder family for more than 60 years, Samsonite was engulfed in the corporate consolidation and buyout binge of the 1970s. In 1973 Samsonite was purchased by corporate giant Beatrice Foods Co. At the time, Beatrice was still garnering about 75 percent of its sales from various food and chemical divisions; but it had 1,000 locations around the world, 8,000 different products, more than 65,000 employees, and was growing rapidly through acquisition. Beatrice planned to allow Samsonite to continue operating as a relatively autonomous company, and to support its expansion efforts financially. Beatrice became the first of several companies that would own and sell Samsonite in the 1970s and through the early 1990s. During that time, Samsonite would effectively jettison its furniture operations and focus its energy on the global luggage industry.

Samsonite continued to grow under the Beatrice umbrella during the late 1970s by expanding globally and introducing new products. Unfortunately, its momentum began to wane. Although the company remained a world leader in its key markets, by the early 1980s Samsonite was losing ground. Lackluster management had left the company with a dearth of new products, despite access to Beatrice's bank account, and Samsonite was rapidly losing its edge and reputation as an industry innovator. In addition, competition from low-cost foreign producers was chipping away at Samsonite's market share. To rectify the situation, Beatrice brought in 47-year-old Malcom Candlish to lead the company. The British-born Candlish was a seasoned consumer products industry executive. Beatrice wanted him to revive the company and put it unquestionably back on top of the luggage industry.

Candlish took the helm in 1983 and immediately began whipping the company into shape. He laid off about 250 workers, initiated aggressive cost-cutting programs, and replaced some of the old guard with new, more aggressive employees. By his own estimate, about half of the company's work force had been replaced by 1989. Candlish also launched a comprehensive study to determine exactly what consumer wanted. That survey lead to the introduction of the "World's Greatest Garment Bag," as described in company promotionals, which became a very successful new product. That bag was followed by a string of new soft- and hard-sided luggage products that served to renew Samsonite's innovation edge. By 1986, Samsonite was generating annual sales of about $300 million (50 percent from overseas operations), controlling about 12 percent of the U.S. luggage market, and rapidly improving.

Like its subsidiary, Beatrice was scurrying during the early and mid-1980s to cut costs and refocus its organization. To that end, it sold Samsonite in 1986 to leveraged buyout king Kholberg, Kravis & Roberts. Then, 15 months later, Kholberg spun off Samsonite and eight other companies into a new company called E-II. Six months later, E-II was bought out by American Brands, which subsequently was purchased by billionaire Meshulam Riklis of Riklis Family Corp. Throughout the buyout melee, Candlish managed to keep his chief executive job and even to improve Samsonite's performance. By 1989, in fact, Samsonite was generating an estimated $430 million in sales worldwide, and Candlish was still working to cut costs and bring out more new products.

As Samsonite continued to post gains in the recession of the late 1980s and early 1990s, its parent company, E-II, floundered and eventually filed for Chapter 11 bankruptcy. "We like to say we have a sick head and a healthy body," said Nick Nell, Samsonite's chief financial officer, in the September 27, 1992, Denver Post. Samsonite's revenues leapt up into the $500 million range in 1992 from the sale of approximately ten million pieces of luggage worldwide. Those sales included nearly 70 percent of the hard-sided luggage sold throughout the world, including such nations as Russia, Argentina, and China. By the early 1990s, Samsonite was recognized as a U.S. leader in global marketing.

Following a messy reorganization of E-II, Samsonite emerged as a subsidiary of a new company called Astrum International Corp. Steve Green, former E-II executive, became the new chairman and chief executive of Samsonite. Under his direction, Samsonite continued to grow and to retain its global bent. In 1993 Astrum purchased the American Tourister luggage company to complement Samsonite. That purchase significantly bolstered Samsonite's lead in the domestic luggage market and broadened its scope to include some lower tier segments of the market. The combined operations were generating sales of approximately $600 million annually going into 1994. Samsonite posted record sales in 1994 of $634 million, about $72 million of which was profit.

Independence Reclaimed and Leading the Global Industry

Samsonite regained its independence for the first time since 1973 when Astrum announced early in 1995 that it was going to split into two companies, one of which would be the new publicly held, independent, Denver-based Samsonite Corporation. The new company retained the Samsonite and American Tourister divisions and related operations. Green expected to stay on as head of Samsonite. Besides expanding into new global markets, Green announced his intention to broaden Samsonite's product line to include luggage racks, golf and ski bags, camping gear, and even computer and camera cases.

In 1996, however, Green was replaced by Richard Nicolosi, who promised the board of directors that he'd "turn a good company into a great one." Faced also with the challenge of debt reduction, as the earlier carousel of corporate ownership changes had saddled the company with debt, Nicolosi (protégé of "Chainsaw" Al Dunlap, the turnaround master at Scott Paper Co.) began implementing cost-cutting measures. He cut the 8,500 workforce by 1,000, shut down factories in Canada and Mexico, and centralized production lines. To save money, the company pulled out of the industry's annual trade show. The result: debt was reduced by $162 million. Stock prices grew optimistically from $18 to $50.

Nicolosi also planned to raise luggage prices across the board and introduce upscale product lines in the U.S., which had already been selling well in Europe. Domestic sales trailed off, though, as the new hardside line failed to stimulate interest in a consumer market with a preference for its softside or hybrid cousin. While company revenues climbed to $741 million in 1997, this mainly resulted from the cost-cutting measures, and investors became frustrated with unimpressive growth in the U.S.; building sales proved to be far more difficult than cutting costs.

In the late 1990s, under the direction of CEO Luc Van Nevel, Samsonite heavily promoted its premium brands worldwide. It began expanding luxury product lines and opening international flagship stores (in Milan, Brussels, London, Washington, D.C., and Hong Kong) as well as licensing its brand names to other companies, such as Hedgren, Hummer, and Trunk & Co.) for use on travel accessories, leather goods, handbags, clothing, and furniture. Samsonite's non-luggage product line by then included footwear and an Italian-designed travel clothing line.

International expansion also continued, particularly in Asia, with ventures in India, Japan, Singapore, South Korea, Thailand, and China. A hefty 55 percent increase in Asian sales helped fuel the company's revenues, which by fiscal year 2000 reached $767.7 million.

Leading the industry in luggage design, it introduced many popular features of the 1990s—molded suitcases on wheels, suitcases with built-in luggage carts, and full-featured, structured garment bags. Samsonite owned approximately 130 patents in the United States alone, and over 900 patents and design registrations around the world. Its innovative designs continued with hybrid luggage products that combined the "best" features of softside and hardside luggage. In 2002, the company planned to introduce a "G-Force" computer bag that touted 360 degree protection. Most products were designed at Samsonite's own research, development, and design centers in the United States and Europe; they were produced around the world primarily at 12 company-owned or leased facilities.

In 2001, a corporate restructuring plan announced the closing of its long-time Denver manufacturing facility, which was scheduled to cease production of hardside luggage as it had done for almost a century. While hardside luggage manufacturing would proceed at plants outside the United States, the Denver office would continue to host corporate operations and remain a major distribution point. Even with the closing of its Denver manufacturing facility, Samsonite remained the leading global producer and distributor of hardside luggage.

With over half of its 2001 revenue of $783.9 million generated outside the United States, Samsonite products were available in more than 100 countries and 200 company-owned stores. Softside luggage accounted for nearly half of its sales. Its three brands, Samsonite, American Tourister, and Lark, remained top sellers as the company retained its leading position in North America, Europe, and Asia. The company planned to use its existing assets—strong brands, quality products, and global capabilities—to improve profitability and expand sales, especially in the luxury markets.

Principal Subsidiaries:C.V. Holdings, Inc.; SC Denmark ApS (Denmark); Samsonite Europe N.V. (Belgium); Samsonite S.A. (France); Samsonite Limited (United Kingdom); Samsonite B.V. (Netherlands); Samsonite Ges.m.b.H. (Austria); Samsonite GmbH (Germany); Samsonite Hungaria Borond KFT (Hungary); Samsonite Finanziaria S.r.l. (Italy); Samsonite SpA (60%) (Italy); Samsonite Espana S.A. (Spain); Samsonite AB (Aktiebolag) (Sweden); Samsonite A/S (Denmark); Samsonite AG (Switzerland); Samsonite Slovakia S.r.o. (Slovakia); Samsonite Sp. z o.o. (Poland); Samsonite Finland Oy (Finland); Samsonite CZ spol. s.r.o. (Czech Republic); Samsonite Mauritius Limited (Mauritius); Samsonite India Limited (65%) (India); Samsonite Singapore Pte Ltd (80%) (Singapore); Samsonite Asia Limited (Hong Kong); Samsonite Korea Limited (80%) (Korea); Samsonite Malaysia Sdn Bhd (Malaysia); Samsonite Hong Kong (2000) Limited (Hong Kong); Samsonite Luggage (Ningbo) Co. Ltd. (China); Samsonite Latinoamerica, S.A. de C.V. (Mexico); Samsonite Mexico, S.A. de C.V. (Mexico); Samsonite Comercio E Participacoes Ltda. (Brazil); Samsonite Industrial E Comercial Ltda. (Brazil); Samsonite Canada Inc. (Canada); Samson S.A. de C.V. (Mexico); Samsonite Mercosur Limited (51%) (Bahamas); Samsonite Brasil Ltda. (Brazil); Samsonite Argentina S.A. (Argentina); Arife S.A. (70%) (Argentina); Lonberg Express S.A. (Uruguay); Samsonite Company Stores, Inc.; Samsonite Pacific Ltd.; Direct Marketing Ventures, Inc.; Samsonite Holdings Inc.; Astrum R.E. Corp.; The Samsonite Foundation, Inc. (Non-profit corp.); McGregor II, LLC; Hortex Incorporated; McGregor China Corp.; Jody Apparel II, LLC; WMI II, LLC.

Principal Operating Units:Samsonite Europe N.V.

Principal Competitors:Brown-Furman Corporation, Land's End Inc., LVMH-Moet Hennessy Louis Vuitton S.A.

Chronology

• Key Dates:
• 1910: Jesse Shwayder founds Shwayder Trunk Manufacturing Company in Denver, Colorado.
• 1918: Company introduces its first nationally advertised suitcase.
• 1939: Unique Samsonite suitcase, predecessor to Samsonite Streamlite line, is introduced.
• 1956: Revolutionary Ultralite luggage line introduced.
• 1965: Company adopts the name Samsonite Corporation.
• 1973: Company is purchased by Beatrice Foods Co.
• 1995: Samsonite regains independent corporate status.