Based in South Plainfield, N.J., Tumi Holdings (proposed TUMI) scheduled a $301 million IPO with a market capitalization of $1 billion at a price range mid-point of $16 for Thursday, April 19, 2012. [S-1]
Tumi is one of nine IPOs that are scheduled for the week of April 16th. (Full IPO calendar here.)
Manager, Joint Managers: Goldman; Credit Suisse; J.P. Morgan.
Summary
Tumi is a global, premium lifestyle brand whose products offer superior quality, durability and innovative design, according to the company.
An upswing in the sector's business since 2008 has helped propel Tumi's top-line revenue. Revenue grew 31% in 2011 to $330 million, from $252 million in 2010.
The company also got serious about earning money. Profits in 2009, 2010 and 2010 were $3 million, $16 million, $32 million (adjusted, see financials), respectively, with a 10% after-tax margin profit margin for 2011.
This rate of increase is not likely to continue, however.
Valuation
Tumi seems priced at the high end of the P/E range compared to Samsonite, Prada and Coach (COH). The 12-month trailing P/E's are as follows: Tumi, 34; Samsonite, 30; Prada, 28; and Coach, 24.
The rate of increase in revenue (compared to the year-earlier quarter) has declined from 42% to 31% to 19%, respectively, for the June, September and December 2011 quarters.
Also, Tumi makes a big deal of its retail expansion, but retail as a percentage of total sales declined from 26% to 23% to 20%, respectively, for 2009, 2010 and 2011.
Conclusion
Tumi should go up on the IPO and a bit in the after market. Tumi does appear to have customer loyalty among high-end consumers, who may also be buyers in the IPO after market. However, IPOdesktop liked Michael Kors (KORS) on its IPO much better than Tumi.
Business
Tumi products include a comprehensive line of travel and business products and accessories in multiple categories. Products are designed for sophisticated professionals, frequent travelers and brand-conscious individuals who enjoy the premium status of Tumi products.
Products are sold through a network of company-owned stores, partner stores, outlet stores, concessions, shop-in-shops, specialty luggage shops, high-end department stores, and e-commerce distribution channels.
Tumi has 1,600 points of distribution in over 70 countries, and its global distribution network is enhanced by the use of three logistics facilities located in the U.S., Europe and Asia.
Since 2005, Tumi has expanded its global presence by successfully implementing growth strategies, including opening additional company-owned stores and increasing wholesale points of distribution.
Tumi estimates that accessories have grown from representing approximately 8% of net sales in 2008 to 14% of net sales in 2011. Additionally, Tumi has seen an increase in the relative percentage of net sales derived from its premium product line, and a decrease in the relative percentage of net sales derived from its core product line in recent years.
Travel Products Industry
In recent years, the travel products industry has seen a trend in consumer preferences toward lighter-weight luggage and travel accessories, as well as merchandise that makes mobile computing and communication more convenient.
Seasonal
In 2011, fourth-quarter net sales represented 32% of total annual net sales. Operating income in the same period represented 42% of Tumi's total annual operating income.
Growth Plan: Indirect-To-Consumer
Tumi plans to continue to grow in key Asian markets, particularly China. Currently, approximately one-third of net sales in the Asia-Pacific region are from China, with Japan and South Korea being the next largest contributors. Indirect-to-consumer net sales in the Asia-Pacific region have more than doubled in the past five years.
Tumi also plans to increase the number of wholesale doors in key European markets including Germany, France and the United Kingdom, and to expand wholesale distribution in Central and South America, while also expanding the product portfolio offered in existing wholesale doors.
In North America, Tumi expects to grow net sales by increasing its wholesale door presence, expanding accessories business in department stores, increasing the variety of products available to third-party e-commerce providers, and increasing penetration of the Canadian market through department stores, specialty stores, e-commerce sales, and new distribution partners.
Since 2007, indirect-to-consumer net sales have, overall, increased slightly in the European, Middle Eastern and African, and North American markets and decreased slightly in Central and South American markets.
Retail Stores
Tumi plans to add new company-owned and partner stores in upscale malls and prestige street venues. The company expects to open eight to 16 company-owned stores in North America and Western Europe in each of the next three years while also expanding its online presence. Tumi had 97 retail stores as of Dec. 31, 2011.
Most of the locations Tumi identified for new company-owned stores are for full-price stores, while the remaining locations are for outlet stores.
Tumi generally expects the payback of an investment in a new company-owned store to occur in less than two and a half years.
Competition
Tumi's biggest global competitor in the travel goods category is Rimowa, a German company. Tumi also competes with Samsonite in Europe, the Middle East, Africa and Asia-Pacific.
In the premium luggage and business cases category, Tumi competes with Bally, Burberry, Dunhill, Ferragamo, Gucci, Louis Vuitton, Montblanc, Porsche and Prada.
In the business case category, Tumi also competes with smaller brands in specific markets. In the U.S., the main competitors are Victorinox and Briggs and Riley.
In Europe, the Middle East and Africa, key competitors are Mandarina Duck and Piquadro.
In the Asia-Pacific region, competition is fragmented. In Japan, the two key competitors are Porter and Ace Brand. Tumi also competes with Coach across the luggage, business cases and accessories categories.
Use Of Proceeds
Tumi expects to net $264 million from the sale of 17.6 million shares. Shareholders intend to sell 1.2 million shares.
Tumi intends to use the net proceeds received from this offering to repurchase all of the preferred stock and a portion of common stock owned by Doughty Hanson, which will own 61% of the company post-IPO.
Disclaimer: This TUMI IPO report is based on a reading and analysis of TUMI's S-1 filing which can be found here, and a separate, independent analysis by IPOdesktop.com. There are no unattributed direct quotes in this article.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
