June 1, 2018 / 12:10 AM / 17 days ago

Samsonite CEO makes hasty exit after short-seller attack, shares surge

SHANGHAI/HONG KONG (Reuters) - Samsonite International SA said CEO Ramesh Tainwala had stepped down, leaving less than week after a short-seller attacked accounting practices that involved entities owned by his family and accused him of resume padding.

FILE PHOTO: The logo of Samsonite is seen in a shop in downtown Rome, Italy March 4, 2016. REUTERS/Max Rossi

The world’s largest luggage maker said Tainwala had resigned for personal reasons but its board took seriously allegations about his academic credentials and his departure was “in the best interests of the company and its shareholders”.

Samsonite also issued a 9-page response to other allegations made by new launched short seller Blue Orca, repeating its stance that the report was one-sided and misleading. It added its auditor KPMG had not withdrawn its audit opinions, nor indicated it would do so.

Analysts praised the swift action but it remains to be seen if Samsonite has done enough to resolve the issue. Its shares surged 12 percent on Friday but are still down more than 10 percent since the attack.

“While the company is viewed as having made the right move with the management reshuffle, it could lead to some uncertainty,” said Linus Yip, chief strategist at First Shanghai Securities.

He added Tainwala’s departure may suggest to investors that some allegations were true and the share rally could be short-lived.

Tainwala did not immediately respond to a request for comment on Friday. He told Reuters last week the firm maintained a “very high standard” of accounting and that “every allegation ... is mischievous and false.”

Blue Orca, which was launched last month by Texas-based short-seller Soren Aandahl, did not immediately respond to a request for comment.

Chief Financial Officer Kyle Gendreau, 49, will take the helm with immediate effect.

He has been Samsonite’s CFO since early 2009. Before joining the company he worked in various financial roles at firms including venture capital-backed start-up Zoots and catalog retailer Specialty Catalog Corporation.

Headquartered in Massachusetts, Samsonite is one of the few major foreign stocks listed in Hong Kong, alongside Prada and cosmetics firm L’Occitane International. It acquired the Tumi brand in 2016.

The firm, now valued at around $4.9 billion, said last month net profit surged 19 percent and revenue jumped 21 percent in the first quarter, led by robust sales of its Tumi brand products.

Prior to the Blue Orca report, the average recommendation from 14 analysts on the shares was a “buy”, Thomson Reuters data showed. Its shares hit a record high of HK$38.60 in April amid expectations of further improvement in the luxury retail sector.

Reporting by Adam Jourdan and Anne Marie Roantree; Additional reporting by Donny Kwok in Hong Kong and Aaron Saldanha in Bengaluru; Editing by Edwina Gibbs

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